President Donald Trump praised “the great American comeback” as the theme of his State of the Union speech Tuesday night — and with unemployment low, the Dow Jones high and two new trade pacts to celebrate, the U.S. economy took a central spot in that vision of the country.
“From the instant I took office, I moved rapidly to revive the U.S. economy —slashing a record number of job killing-regulations, enacting historic and record-setting tax cuts, and fighting for fair and reciprocal trade agreements,” he said.
The economy has been strong under Trump even if at times he has overstated its success. Unemployment has fallen to 3.5 percent, the lowest it has been in more than 50 years, while the Dow Jones closed on Tuesday at 28,800. But growth was at 2.3% last year, not the 4%, 5% or even 6% that Trump promised. A $1.5 trillion tax cut was enacted by Republicans in 2017 though it did not pay for itself as promised and the country’s debt now stands at $23 trillion.
Trump pointed to the first phase of a new trade deal he signed with China last month.
“Days ago, we signed the groundbreaking new agreement with China that will defend our workers, protect our intellectual property, bring billions of dollars into our treasury, and open vast new markets for products made and grown right here in the USA,” he said, according to the text.
A trade war with China led to losses in both countries — higher prices for U.S. consumers and export losses for China, a United Nations report found last year — but Trump signed the first phase of a new trade deal last month. China agreed to buy an additional $200 billion worth of American goods and services, including an additional $80 billion in agricultural goods over two years, and to take action on intellectual property theft. That is above levels before the trade war.
State of the Union Coverage
But the coronavirus threatens that timetable. Most Asian stock indices plunged on Monday on concerns about the virus' possible economic effect. The spreading virus has already slowed the Chinese economy by bringing factory work to a stop and Hyundai announced Tuesday it would shut down its car production lines in South Korea because of a shortage of Chinese parts.
The deal with China also keeps most of the tariffs that Trump had placed on more than $350 billion worth of Chinese goods. Some trade experts told NBC News that the agreement, which led to a $28 billion bailout of American farmers, fails to justify the globally damaging trade war and could mean higher costs for American businesses and consumers.
Another new deal Trump recognized was the renegotiated NAFTA or the U.S.-Mexico-Canada Agreement, which he also signed last month.
“Many politicians came and went, pledging to change or replace NAFTA – only to do so and then absolutely nothing,” he said. “But unlike so many who came before me, I keep my promises. We did our job. Six days ago, I replaced NAFTA and signed the brand new U.S.-Mexico-Canada Agreement into law.”
The new agreement will increase the number of cars made in the United States and open Canadian markets for American dairy products, but other parts just update the accord, some experts say.
Unemployment rates for African-Americans, Hispanic-Americans and Asian-Americans have reached the lowest levels in history, Trump said. The unemployment rate for African-Americans in October 2019 was 5.4%, for Hispanics, 4.1% and for Asians, 2.9%, according to the Bureau of Labor Statistics. The unemployment rate for women reached the lowest level in almost 70 years, he said.
The unemployment rate for African-Americans is the lowest since the Bureau of Labor Statistics began reporting it in 1972, but the Economic Policy Institute notes that the rate has been falling since 2011.
Trump also said that in the eight years under the last administration, more than 300,000 working-age people dropped out of the workforce. In three years of his administration, 3.5 million working-age people have joined the workforce, he said.
The Labor Department says the labor force grew by 5.06 million in the eight years of the Obama administration, according to an Associated Press fact-check. Under Trump, the force has grown by 4.86 million.
Trump said that after decades of flat and falling incomes, wages are rising fastest for low-income workers, who have seen a 16% pay-increase since his election.
“This is a blue collar boom,” he said.
But the Economic Policy Institute, a non-partisan think tank created in 1986 to include the needs of low- and middle-income workers, called the “blue-collar boom” a likely dud. Globalization has led to the elimination of nearly 5 million factory jobs over the past 20 years and the new agreements with China and Mexico and Canada will likely lead to more outsourcing and job losses, it predicted.
Trump trumpeted the country’s manufacturing, though it is in recession, with the downturn extended to a fifth consecutive month in December.
“We are restoring our nation’s manufacturing might, even though predictions were that this could never be done,” he said. “After losing 60,000 factories under the previous two administrations, America has now gained 12,000 new factories under my administration.”
There were about 54,000 more private manufacturing establishments or factories at the end of 2016 compared to the start of 2001, according to the U.S. Bureau Statistics. And since Trump took office, there are 12,000 more manufacturing establishments, also according to the U.S. Bureau of Labor Statistics.
Most are small businesses with fewer than five employees.
And the number of factories started to increase in 2013 under President Barack Obama, BBC News wrote last month in a fact check.