President Trump uses the word “disaster” to describe not only the economy he inherited from the “disastrous Biden administration”, but also for the fundamental drivers behind our economic growth: international trade, universities and their scientific research, technology for innovation, immigration talent, etc. Our economic system is like a brand in that both are created to be strategic and sustainable, with core promises. Indeed, Trump has said
only he could reverse the “staggering American decline”.
The extraordinary disruption that Trump has created over the past four months is an outgrowth of the MAGA/populist document, Project 2025. As reported by Paul Dans, the key architect of Project 2025, the premise behind Trump’s devastating executive orders is that “the system is broken. Mr. Trump is a builder and knows that the initial phase of any renovation is demolition”.
A Historical Perspective of Economic Growth
But has our economic system really failed Americans over the past decades, hence warranting such a seismic overhaul? The economic writer, Noah Smith, has described the history of the American economy in three eras:
• The post WW II boom from 1945 to 1973
• 1973 to 1994 with oil shortages, productivity slowdowns and wage stagnation
• 1994 to today, when NAFTA and the W.T.O. were established, achieving higher productivity and wage growth
Yes, imports from China during this period caused job losses, and gains in productivity added to these losses, but most of these were offset by job gains from higher exports. Today the problem is not a lack of manufacturing jobs since there are almost half a million manufacturing job openings unfulfilled. And the unemployment rate is at a record low (4.1% at the end of Biden’s term).
Proof of Recent Economic Success
All in all, economic output has grown significantly during this latter period, with prosperity rising for most American households:
• In 1994, the G.D.P. per capita in America was about the same as Europe, but today it is $83,000 compared to $54,000 for Germany, $45,000 for France and $39,000 for Italy.
• According to the Organization for Economic Cooperation and Development, U.S. households had $63,000 in disposable income in 2023, versus $35,000 in France and $36,000 in the UK.
• The Economist noted that “on a per-person basis, American economic output is now about 40% higher than in Western Europe and Canada”.
During these past 30 years, there have admittedly been some “bumps in the road” – e.g. the 2007-09 financial recession, and Covid contributing to higher inflation and the current affordability challenge. However, the Biden administration left us with a healthy economy: GDP growth at 2.7% and inflation down to 2.9% (source: U.S. Department of Treasury).
Consistency has been critical for maintaining strong worldwide trust in the American economy. Importantly, the main pillars behind this sustained economic growth had remained untouched, led by effective globalization and American leadership in technology and scientific research, primarily at universities.
Today chaos is the norm as Trump takes a sledgehammer to these core drivers of American prosperity, with his absurd tariff plans, retribution attacks on universities, the media and law firms and a proposed budget that will generate more than $ 2.4 trillion in debt over other the next decade. The economic policies behind American growth during the past 30 years are in serious jeopardy with this populist 2025 plan. Already lower trust in our system has adversely affected the value of the dollar and Treasury bonds. In short, the premise behind Trump’s delusional accusations is a gross distortion of the truth. The presumption that our economic system is a “disaster” is the ultimate falsehood.
