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The Trump economy is nothing special

A funny thing happened on Inauguration Day, and the exact same economic conditions that had existed throughout 2016 — steady but nonspectacular job growth, low unemployment, sluggish but real wage growth, record stock market valuations — changed political valences.

Suddenly, performance Trump labeled disastrous under Obama was spectacular under Trump.

In some ways, even more oddly, while in 2016 pundits saw Trump's political success as a sign that real economic conditions were worse than the statistics in, say, 2017, pundits marvel that Trump could be so unpopular despite the strong economy.

A more useful exercise, I think, is to consider the international context:

  • The American stock market is up a lot in 2017, but the German and Japanese markets are up by more.
  • The S&P 500 is at an all-time record, but so are markets in the United Kingdom, Canada, South Korea, Taiwan, and elsewhere.
  • The US unemployment rate is the lowest in more than 17 years, but Japan's is the lowest in more than 20 years. The UK and Germany are the lowest since the 1970s.

A particularly telling sign about all of this is that while America's GDP growth has come in above expectations this year, so has eurozone GDP growth — and in fact, the eurozone has grown more rapidly than the United States. Japan is growing more slowly than we are (which is what happens when your working-age population is shrinking), but their GDP numbers are also beating expectations this year.

Long story short, whatever the good news about the economy is, it's something quite general. They don't have record-low joblessness in Japan, above-expectations growth in Europe, and stock markets at an all-time high in the UK because Trump ended Obama's war on coal or whatever. The real truth is that there simply isn't that much to explain about Trump and the economy — either how he's impacted or how it's impacting his poll numbers — because there isn't much happening.

Yet we can expect dissonance on this score to keep piling up because of something I'd call "record illusion."

As long as a whole bunch of key US economic indicators remained below their 1999 level, it was easy to shorthand frustration with relatively slow growth rates with reference to the past. "Americans haven't had a raise in over 15 years," was something Trump said as a candidate by way of shorthanding the fact that CPI-adjusted median household income was lower in 2015 than it had been in 1999. Annie Lowrey wrote in New York magazine in 2014 about how "we peaked in the late 1990s."

But by Election Day 2016, this "peak" stuff wasn't true anymore. Median household income — and a whole bunch of related stats like median wages, median compensation, GDP per capita, etc. — had all reached their all-time peak. So had the stock market, corporate profits, and other business-side indicators.

And once that became the case, any upward trajectory in anything generates a new record. So we're now at a point where even if 2018 features incredibly sluggish growth on all indicators, we'll be constantly setting new all-time records and we'll keep debating how much credit Trump is getting, should be getting, or would be getting if not for his tweets.

This is an abbreviated web version of The Weeds newsletter, a limited-run policy newsletter from Vox’s Matt Yglesias. Sign up to get the full Weeds newsletter in your inbox, plus more charts, tweets, and email-only content.