Are you thinking about buying a home? Then you are probably curious to know how the American economy is doing. Generally, under President Trump, Americans think the economy is doing well. How much of that is reality and how much of it is perception is open to question.
A CBS poll from May 2018 found that two out of three Americans believe the economy is in good condition. Most of them also believe Trump’s policies are at least partially responsible. Naturally, more Republicans rate the economy as doing well than Democrats.
That survey has generally tracked Trump support and opposition levels over the first two years of his presidency. These days, more Americans are feeling positive about the economy; the ranks of the strongest Trump backers have gone up 22% from 18% in January. Many of these Trump supporters had had more of a wait and see attitude about Trump.
However, some question how rosy the economy really is; Trump is a good salesman, and it could be that some of what is going on is hype. Consider the following points:
- Some economists say the economy has not changed much since the end of the Obama administration, in terms of measured economic growth. GDP continues to grow but at a relatively modest rate of 2.3%. That is what it grew at in Obama’s second term, too.
- Unemployment is doing, but hiring has not been as robust as some believe. Since Trump took over, payrolls have expanded by 186,000 jobs per month. Over Obama’s second term, it averaged 216,000. Also, the unemployment rate was falling under the latter half of the Obama presidency.
- Wage growth has been disappointing under Trump, but it was under Obama, too. Adjusted for inflation, earnings each hour grew very little over the last year – just .4% in March compared to the year before. Obama did see a few periods of real wage growth above 2%, but his record was not good either. Some companies announced plans after the Trump tax cut to use the money saved to increase worker pay. But many of the companies probably were going to do it anyway and used the big PR announcement to curry favor with Trump.
- Federal deficits as part of the whole economy did grow under Obama in the first term. This was largely because there was a major financial crisis. Tax revenues shrank. Federal spending went up thanks to unemployment benefits being used and stimulus efforts. As the economy got better, deficits did shrink but they did not disappear. Under Trump, the deficits have exploded again; this is due to spending increases and tax cuts.
- It should be noted that we have not seen the full impact of the Trump tax cuts yet. But experts contend that their effects will probably be short term and not that significant. Consumers have not really noticed their increased paychecks yet. Also, people who get the most benefit are the wealthy who are not as likely to spend their windfall.
In the end, experts generally agree that presidents get too much blame and credit for good and bad economies. Trump is very good at promoting economic numbers that put him in a good light, and it is true that the economy is much stronger than a decade ago. But a lot of that is just because of the economic recovery that has been occurring under two presidents for a decade. It also is important to remember that Trump is known as a pro-business person, and some of the good ratings of the economy under him could just be because people think a businessman would have to be good for the economy.
If you are thinking about buying a home now, it really comes down to your personal financial situation. Keep in mind that rates are generally on the rise, and home prices have increased by 6% on average since last year in the US. It seems we are generally in a rising interest rate environment in 2018, with it unlikely that rates will fall below 4% again anytime soon.