Fact Checking the Economics in Trump's "State of the Union" Speech

On February 4th, 2020, President Trump delivered his State of the Union address. Trump has repeatedly taken credit for the strong economy, so it is little surprise that he continued to brag about the strength of the US economy under his administration. Trump has continued to campaign on this fact. 

However, do the presidents claims line up with reality? I have taken most of the claims from Trump’s SOTU speech concerning economics and economic data to see if Trump’s rhetoric is more fact than fiction.

A transcript of the speech can be found here

The State of the Union

“Since my election, we have created seven million new jobs — five million more than government experts projected during the previous administration.”

Trump is counting jobs created from his election in November 2016, rather than from his inauguration in January 2017. Counting from his election, BLS (Bureau of Labor Statistics) data shows ~6.9 million jobs created. Trump is essentially correct, but he is rounding up with his numbers.

“The unemployment rate is the lowest in over half a century.”

This claim is correct. BLS records the unemployment rate for December 2019 to be at 3.5%. January 2020 is recorded at 3.6%. The last time unemployment was this low was 1968-1969.

“If we hadn’t reversed the failed economic policies of the previous administration, the world would not now be witnessing this great economic success.”

Trump usually paints a picture of a previously sagging economy, which was saved by him and is now soaring as a result of his policies. This is dubious at best. In the BLS unemployment statistics, for instance, unemployment rates were falling throughout the Obama presidency. That trend has just continued under Trump. This principle generally applies to everything the president touts. It started under Obama and has continued under Trump. I encourage the reader to examine the other statistics cited throughout to determine this for themselves.

“The unemployment rate for African-Americans, Hispanic Americans and Asian-Americans has reached the lowest levels in history.”

These claims are all true. BLS data records African-American unemployment at at an average of 5.63% for the last half of 2019, which is a record low. Hispanic-American unemployment averaged 4.18% for the last half of 2019, which is, again, a record low. The Federal Reserve of St Louis records Asian-American unemployment at 2.68% for the last half of 2019, which is the lowest recorded. It is important to mention that unemployment for African-Americans and Hispanic-Americans has only been record since 2008. Unemployment for Asian-Americans has been recorded since 2000. Trump’s claims are still correct, but the sample size is smaller than one might think.

“African-American youth unemployment has reached an all-time low.”

This claim is correct. FRED reports that African-American unemployment ages 16-19 averaged 18.67% for the latter half of 2019, another all-time low.

“African-American poverty has declined to the lowest rate ever recorded.”

I was unable to find good data on this claim, but from the data I was able to find, Trump is correct. KFF reports that in 2018, the latest year they have recorded, African-American poverty declined to 22%, a decrease from 23% in 2017. This rate is the lowest KFF has on record, but their records only extend bak until 2008.

“The unemployment rate for women reached the lowest level in almost 70 years.”

This is correct. FRED data shows that November and December of 2019 both had 3.5% unemployment. The last time women unemployment was that low was in 1953.

“The veterans unemployment rate dropped to a record low.”

This claim depends on what exactly Trump is trying to say. The lowest single month unemployment rate of Trump’s presidency is 2.3% which occured in April of 2019. This would tie May 2000 at 2.3% for the lowest ever recorded. However, averaging 2019 against average rates for other years would result in 2019 having the lowest rate.

“The unemployment rate for disabled Americans has reached an all-time low.”

This is correct. FRED shows a 6.95% unemployment rate in the latter half of 2019 for Americans with disabilities. This data has only been recorded since 2008, meaning that, again, the sample size is small.

“Workers without a high school diploma have achieved the lowest unemployment rate recorded in U.S. history.”

I could not find recent data to verify this claim. BLS data shows low-educated worker unemployment rates until August 2018, and up to that point, the unemployment rate was the lowest ever recorded.

“A record number of young Americans are now employed”

This is correct. FRED data shows that the youth unemployment rate in 2019 was 8.37%, the lowest rate ever recorded.

“Under the last administration, more than 10 million people were added to the food stamp rolls. Under my administration, seven million Americans have come off food stamps”

These claims are both correct. SNAP data showsthat in 2009, 33,490,000 Americans were collecting SNAP benefits. In 2016, this number increased to 44,220,000. These numbers result in an addition of 10,730,000 Americans collecting benefits in this time frame. In 2017, 42,228,000 Americans were collecting benefits. In 2019, this number decreased to 34,747,000. These numbers give us a decrease of 7,481,000 Americans collecting benefits.

There are different ways to interpret these numbers, however. Those allied with President Trump and his agenda will doubtless view this as a sign that people are rising out of poverty and thus, no longer needing SNAP benefits. However, those rallied against President Trump’s agenda could view the decrease on the rolls as a result of Trump’s cuts to SNAP.

“In eight years under the last administration, over 300,000 working-age people dropped out of the work force. In just three years of my administration, 3.5 million people — working-age people — have joined the work force.”

From the data I could find, this claim is incorrect. US Bureau of Statistics shows that from January 2009 to December 2016, the number of Americans in the work force increased by 5,500,000. From January 2017 to January 2020, 4,959,000 have joined. I am interested to see what statistics Trump is using here, as the US Bureau makes Obama look better, but it also makes him look better as well.

“Since my election, the net worth of the bottom half of wage earners has increased by 47 percent — three times faster than the increase for the top 1 percent.”

Data on this topic is lacking and I was unable to find any statistics to confirm or refute Trump’s claim. It is politically interesting that he is inserting a claim to try and show income inequality is shrinking, however.

“After decades of flat and falling incomes, wages are rising fast — and, wonderfully, they are rising fastest for low-income workers, who have seen a 16 percent pay increase since my election.”

First, it’s a stretch to say wages are rising fast. The Federal Reserve Bank of Atlanta records that wages grew an average of 3.66% growth for 2019. This is lower than the late 90s, and early to mid 2000s. The rate at which wages are rising is going up, but not rising fast.

As for the 16% pay increase for low-income workers, I have found no good data to confirm or deny Trump’s claim. I am skeptical of this claim, however, as it would take slightly above a 5% year-over-year increase from 2017-2019 to result in a 16% increase. This would be noticeably higher than the national average over this period.

“Real median household income is now at the highest level ever recorded.”

This is correct. FRED reports median household income at $63,179 in 2019, which is the highest ever recorded.

“Since my election, U.S. stock markets have soared 70 percent”

This is correct. January 31, 2017 the Dow Jones closed at 19,864.09. February 3, 2020 saw the Dow Jones close at 28,399.81. This results in an increase of 69.9%.

This makes up the bulk of Trump’s claims during the State of the Union address. I will not address any claims made on other topics throughout the speech, but leave it at the economic claims. 

The data paints a picture of a strong economy. However, there are arguments to suggest the economy is not nearly as strong as the data suggests. The Federal Reserve has been engaging in large market operations in the Repo market ever since September 2019, and plans to continue until April 2020. The Fed also cut its target rate over the fall, seemingly reversing its previously policy of shrinking its balance sheet and is now in the process of expanding it once more. I encourage the reader to come to their own conclusions.

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