The Finance 202: Trump’s false claims about his economic record typified chaotic debate


He repeated one of his most common refrains, for example, that before the pandemic struck, his administration built “the greatest economy in history.”

Coming into the year, the Trump team aimed to make that argument the spine of its reelection pitch to voters. And it’s true, as Reuters’s Howard Schneider writes, that before the coronavirus forced an economic shutdown, “record-low unemployment and rising wages were helping the less well-off, while a record stock market buoyed richer Americans.”

In the first half of his term, Trump’s signature tax cuts and a major spending package gave the economic expansion he inherited a turbo-boost of fiscal stimulus. But as they faded, and Trump launched a multi-front trade war that weighed on investment and spending by businesses, growth slowed from 2.9 percent in 2018 to 2.3 percent last year, well short of the 3 percent pace he promised to lock in, at a minimum.

And even if Trump had lived up to his pledge to maintain a 3 percent pace, it would have fallen short of the roughly 4 percent growth in the second half of the 1990s — as well as a mid-1980s boom.

Judged on a more recent timeline, from the beginning of the Obama administration, pre-pandemic growth under Trump has merely followed the trend — contrary to Trump’s claim in the debate that after his 2017 tax cuts, the economy “boomed like its never boomed before”:

Similarly, job growth during Trump’s first term mostly continued apace from the Obama years until the pandemic hit.

Skipping over the worst of the damage from this year’s recession, Trump i pointed to “10.4 million in a four-month period that we’ve put back into the workforce.” But as the chart suggests, Trump is on track to finish his term with fewer jobs than when he took office. 

Biden said that would make Trump the first president in history to do so. Yet Bureau of Labor Statistics data only go back to the middle of Franklin D. Roosevelt’s administration in the late 1930s. 

Trump pledged to set records in the other direction. As a first-time candidate in 2016, he promised to put the country on track to add 25 million jobs in a decade, which would have been the most of any president.

Both candidates overstated their attacks on the other’s record on jobs in manufacturing.

In his first run, Trump emphasized he would revive manufacturing jobs as his campaign targeted — and won — typically Democratic strongholds in the industrial Midwest.

Biden on Tuesday said the sector “went in a hole” under Trump even before the economic crisis this year. Trump countered that Biden and the Obama administration “brought back nothing. They gave up on manufacturing,” while he “brought back 700,000 jobs.”

Both claims were inaccurate. The economy added roughly 500,000 manufacturing jobs in Trump’s term before the pandemic. Since the economic crisis, however, employment in the sector has dropped to levels not seen since 2014.

For its part, the Obama administration inherited an industry in steep decline amid the 2008-2009 financial crisis. By the end of that team’s eight-year run, manufacturing jobs had returned to the level where they stood when they took office:

And that amounted to a turnaround from a three decade decline:

But as far as those tuning in were concerned, this chart is probably a more instructive indicator of how the debate went: 

Latest on the federal pandemic response

Pelosi and Meadows say they’re hopeful a stimulus deal is possible.

Renewed talks show some signs of progress: “House Speaker Nancy Pelosi told reporters at the Capitol an agreement could come this week, which is supposed to be Congress’s final one in session before recessing through the election. She spoke by phone for about 50 minutes Tuesday morning with Treasury Secretary Steven Mnuchin, with whom she negotiated four relief bills in March and April totaling about $3 trillion,” Erica Werner reports.

“Pelosi and Mnuchin are set to talk again [today], at which point Mnuchin is expected to come back with a more detailed response …Congress hasn’t acted to pass any new aid since the spring, and prospects for a bipartisan deal ahead of the election were looking increasingly grim.”

PPP loans are starting to be forgiven: “The government expects to approve and pay forgiveness requests by late this week or early next, a Treasury spokesperson said. The applications are generally expected to be approved quickly, with the exception of loans above $2 million that will get added scrutiny,” the Wall Street Journal’s Yuka Hayashi reports.

“Business advocates, banks and lawmakers have raised concerns that the process of turning the loans into grants is too complex and slow under the $670 billion federal program, designed to help small businesses respond to the economic fallout of the pandemic with forgivable government-backed loans distributed through banks.” 

Campaign 2020

U.S. Chamber abruptly ousts top political consultant.

The top business lobby’s move widens its rift with Republicans: “Scott Reed, the veteran GOP political consultant, was fired by the U.S. Chamber of Commerce as the organization’s political director amid allegations that he had leaked confidential information. Reed, who managed the presidential campaign of Bob Dole in 1996, had helped pilot the chamber’s well-funded congressional election strategy for more than a decade,” Tom Hamburger reports.

“A replacement has not been named, but an internal memo obtained by The Washington Post says that the chamber anticipates no disruption in its election plans, which this year included endorsing 30 Democrats seeking House seats. This shift has led to a growing rift between the chamber and top Republicans.

  • Reed blasted the Chamber in an interview: “I can no longer be part of this institution as it moves left,” Reed told Politico’s Alex Isenstadt and Scott Bland. Senate Majority Leader Mitch McConnell joined the pile on. “Honestly at this point, I think they’re so confused about what they’re about that they probably don’t make much difference,” he said.

The Bidens paid nearly $300,000 in federal income taxes: “Biden and his wife, Jill, paid nearly $300,000 in federal income taxes on earnings of more than $985,000 in 2019, according to returns he released following a news report that Trump has paid far less in recent years,” Sean Sullivan reports.

“Biden’s running mate, Sen. Kamala D. Harris (D-Calif.), also released her 2019 taxes … Her return showed nearly $3.3 million in total income with her husband, Douglas Emhoff, who had a lucrative law practice from which he is currently on leave. They paid more than $1.1 million in federal taxes.”

Market movers

U.S. consumer confidence posts biggest gain in 17 years.

But like all recovery news, downsides remain: “Consumers also appeared to shrug off growing uncertainty ahead of the Nov. 3 presidential election and signs the economy’s recovery from the recession was slowing,” Reuters’s Lucia Mutikani reports.

“The Conference Board’s consumer confidence index increased 15.5 points to a reading of 101.8 this month. That was the largest gain since April 2003. Economists polled by Reuters had forecast the index edging up to a reading of 89.5 in September. The index was at 132.6 in February.”

  • New York Fed President John Williams sees up to three years for full recovery. “I do think the economy is on a pretty good trajectory so it’s really a matter of if there’s more or less fiscal policy that maybe tilts that trajectory,” Williams told reporters Tuesday, per Reuters. 

Peter Thiel’s Palantir goes public on NYSE today: “The direct listing on the New York Stock Exchange is one of the most hotly anticipated tech IPOs in years, as investors seek to capitalize on a business that has grown by almost a third each year since 2009. But recently disclosed financial records… suggest Palantir’s business may be overly concentrated among a handful of loyal customers, raising questions about whether it can scale up the same way as other tech outfits,” Aaron Gregg and Douglas MacMillan report.

Robinhood uses weren’t as reckless as portrayed: “The image of the investing app’s clients spending their days loading up on fad stocks doesn’t accord with reality, according to a new working paper published by the National Bureau of Economic Research titled, ‘Retail Raw: Wisdom of the Robinhood Crowd and the Covid Crisis,’” Bloomberg News’s Sarah Ponczek reports. Instead, as the professor behind the study found, the average Robinhood portfolio “was a lot more ordinary.”

Coronavirus fallout

From the United States:

  • At least 7,155,000 cases have been reported; at least 205,000 have died. 
  • Trump administration’s new rapid tests plagued by confusion and a lack of planning: “Health officials in several states say they have been allowed no say in where the new tests are being sent and sometimes don’t know which nursing homes will receive them until the night before a shipment arrives. That has left some facilities ill-trained in how to use the tests and what to do with results. And it may be contributing to false-positive test results — when people are identified as being infected but aren’t,” William Wan and Lena H. Sun report.
  • New York region sees 40 percent bankruptcy surge: “This fall, the nation’s largest city will see even more padlocked doors as companies burn through federal and private loans they tapped in March, landlords boot businesses that can’t make rent, and plummeting temperatures chill outdoor dining and shopping,” Bloomberg’s News’s Josh Saul and Henry Goldman report.
  • Sanitation workers are feeling the strain of trash piling up: “From Chicago to New York City, Philadelphia, and New Orleans, U.S. disposal workers are facing a daunting burden: Municipal trash collection is a job more essential than most, and it comes with additional health risks for the people who do it,” Bloomberg News’s Gerald Porter Jr. and Sarah Holder report. 

From the corporate front:

  • Disney lays off 28,000: “About two-thirds of those losing their jobs are part-time employees, the company said … The company did not reveal what percentage of its workforce that entailed, but it’s believed the U.S. theme parks employ about 200,000 people, which would make the layoffs a workforce reduction of 14 percent,” Steven Zeitchik reports.
  • Retail bankruptcies, store closures hit record in first half: “This year’s collapse in American retail could overtake that of 2010, when 48 retailers filed for bankruptcy in the wake of the 2007-09 recession, according to the report by professional-services firm BDO USA LLP,” WSJ’s Aisha Al-Muslim reports.
  • Meatpackers deny workers benefits for covid complications: “Workers can challenge companies’ denials in an administrative process that varies by state but typically resembles a court hearing. The burden of proof, however, usually falls on the worker to prove a claim was wrongfully denied,” Reuters’s Tom Hals and Tom Polansek report.
  • Movie industry dealt devastating blow with more blockbuster postponements: “Shares of AMC plummeted 7 percent after the announcement,” CNBC’s Sarah Whitten reports of Disney’s decision to push “Black Widow” until next May. “IMAX shares fell 6 percent, Marcus Theater’s stock slipped 5.7 percent and Cinemark shares dropped 3 percent. Disney’s shares were down around 2 percent.”

When superpowers collide

TikTok was just the beginning.

The Trump administration is stepping up scrutiny of past Chinese tech investments: “The emailed requests for information are being sent by a new enforcement arm of a government committee that monitors foreign investment for national-security risks, according to lawyers and a redacted copy of one email reviewed by The Washington Post. After the Committee on Foreign Investment in the United States (CFIUS) gathers details from the companies, it can decide whether to probe the matter further and even push the foreign investor to divest, as it did in the case of TikTok,” Jeanne Whalen reports.

“The letters, which began landing in dozens of companies’ email inboxes in the spring, reflect the broadly held view among U.S. officials and lawmakers that the United States failed in recent years to adequately screen investments pouring in from China and other countries — particularly low-profile venture-capital investments that didn’t make the headlines.”

Huawei lawyers wrap up arguments in Canadian court: “ Lawyers for the Canadian government asked a judge to keep Huawei CFO Meng Wanzhou’s extradition case to the United States ‘on the straight and narrow’ and described the evidence presented by the defense as inadmissible,” Reuters’s Moira Warburton and Tessa Vikander report.

“The hearing is expected to wrap up [today]. Meng’s extradition case is scheduled to finish in April 2021.”

Pocket change

Major firms commit to share government diversity data.

The move comes after many companies pledged to do more for racial justice: “New York City Comptroller Scott Stringer, who advises the city’s public retirement funds, said Monday that 34 companies — some of which had refused to release the same reports as recently as last year — would disclose their full data by March 2021,” Jena McGregor reports.

“BlackRock’s report shows that in 2019, four of its 103 executive or senior-level employees (3.9 percent) were Black. BlackRock said in a statement that the firm has ‘made strides’ but ‘we acknowledge significant work remains ahead to realize sustainable change, and the disclosure of our EEO-1 data is an important step towards greater transparency and accountability.’ Target’s release, meanwhile, showed that 40 of its 777 executive or senior-level employees were Black (5.1 percent) and 50 were Hispanic or Latino (6.4 percent). In a statement, Target called being more transparent about their data ‘the next step in our journey to build an organization that is more diverse, equitable and inclusive.’”

JPMorgan Chase to pay $920 million to resolve illegal trading cases: “The settlement, the largest ever imposed for this type of fraudulent activity, known as spoofing, resolves investigations by the Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission, according to statements from the government agencies,” Hamza Shaban reports.

“For years, JPMorgan traders initiated orders to buy or sell precious metals, Treasury notes and Treasury futures only to quickly cancel the trades before they were executed. The illegal practice sends a false signal to other market players, prompting price changes that the spoofers can then exploit. According to the CFTC, traders at JPMorgan, in many instances, were successful in causing artificial price changes that were favorable to them.”

Oil traders doubt OPEC will boost output as planned in 2021: “OPEC is unlikely to increase oil output as planned from January next year as it could mean adding more downside pressure to the already bearish and weak market, top traders said,” Reuters’s Dmitry Zhdannikov and Julia Payne report.

“OPEC is due to taper their production cuts by 2 million barrels per day in January. OPEC and other major oil producers announced record oil cuts in March this year as fuel demand collapsed with half the world in some form of lockdown to stop the spread of covid-19.”

Daybook

  • The Labor Department reports the latest weekly jobless claims
  • PepsiCo, Bed Bath & Beyond and Conagra Brands are among the notable companies reporting their earnings.
  • The Labor Department releases the monthly jobs report, the last before Election Day.

The funnies

Bull session

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