What credit does Trump deserve for the economy? Kevin Hassett makes an unconvincing case.

Last week, Barack Obama gave a laconic and largely covered speech about our current president. In this paper, he suggested that Donald Trump did not necessarily deserve much credit for the healthy economy he has a tendency to boast about.

"When you hear how good the economy is now, just remember when this recovery started," Obama said. "I mean, I'm glad it's going on, but when you hear about this economic miracle that's happening, when the job numbers come out, monthly employment figures, suddenly, Republicans say it's a miracle I have to kind of remind them that these numbers are the same as in 2015 and 2016. "

In other words, Obama was saying, Trump was born on the third economic base and thinks he's hit a home run.

On Monday, the White House tried to present a counter-argument without admitting it exactly. The chairman of the Council of Economic Advisers, Kevin Hassett, has stopped at the White House 's daily press conference to present a series of graphs meant to demonstrate the improvement in the economy after the summer. Trump election. "We were ready to do this briefing a few weeks ago and there is no time for President Obama's speech on Friday," Hassett told reporters.

This was not particularly convincing. Hassett also did not expose the case, in which he used oddly misleading tables to prove that several economic trends have improved significantly after Trump's election.

Take the Hassett chart for business investment. This is a particularly important step for Republicans, as they argued that tax cuts and deregulation and the general improvement in Trump's trust in the White House would spur businesses to spend more on equipment and facilities. This is what these graphs seem to show (the main on the left). Investment growth generally slows after Obama's reelection in 2012 and hovers around 1% only when Trump wins the White House. After that, it rises sharply.

This graph is a bit misleading because it does not show actual quarterly growth data. Instead, it uses the average growth rate on the most recent six quarters, that is, in the last 18 months. Economists will sometimes compare together a few months of economic data when the numbers are extremely noisy to show a clearer and more understandable trend. But reaching six quarters is extreme and distorts the history of the economy by giving the impression that any change in growth patterns starts much later than in reality.

This is what business investment looks like in recent years. The growth rate initially increased during Obama's first term, then declined before starting to recover in mid-2016, before Trump's election. The pace of investment has continued to grow under Trump, but the timing and evolution of the previous trend are totally different.

This is important because much of Obama's investment crisis was caused by a collapse in oil prices, which halted work in Texas and North Dakota. After the start of crude oil recovery in 2016 and 2017, the number of oil rigs has also increased, helping to support business investment. The oil was not the only decisive factors for investment, but it's an important factor that has nothing to do with Obama's or Trump's policies.

Do not dwell on the point, but you see the same model playing with the goods equipment orders. The White House is trying to take credit.

Meanwhile, they seem to have largely evolved in parallel with oil.

One of the most disconcerting aspects of Mr. Hassett's presentation was his attempt to show that the labor market had improved considerably, using the employment rate of the 25 to 54 age group. Here is the graph of the CEA, which again relies on an average of six quarters of the data. It shows that the employment rate is increasing slightly faster under Trump than during the second term of Obama.

If you look at the long run and use the actual employment rate rather than the moving average, it is difficult to see a noticeable change in the trend after November 2016.

The fact is that Trump does not deserve any credit for the state of the economy. The man signed a massive tax cut and a sharp increase in public spending; even if you do not believe that corporate or wealth rate cuts will produce the long-term benefits promised by the Republicans, all the extra money that circulates has certainly been some kind of stimulating effect in the short term. As Hassett pointed out today, small business confidence has skyrocketed after the election – which makes sense since many small business owners are Republicans – which can make a difference. But the economic expansion we enjoy today was triggered by Obama; the ups and downs of business investment seem to have as much to do with factors outside the control of our politicians as the oil market, that they make public policy decisions. As much as the White House would like to prove the opposite, it can not.