Michael Harrison: Trump’s bragging blinds him to storm clouds ahead

Beware the ship’s captain who claims credit for the weather. That is precisely what Donald Trump has done, relentlessly so, since he assumed the presidency on a rising tide of good news about the US economy.

These strong prevailing economic winds have helped blow the Republicans across the line today in the midterm elections to the Senate but they have not proved enough to enable them to retain control of Congress.

As America went to the polls, the weather could not have been better for Trump. America created 250,000 jobs last month — far more than forecast — and the US jobless rate, at 3.7%, is the lowest since Neil Armstrong walked on the Moon and close to the point at which there is effectively full employment. Wages, meanwhile, are rising at the fastest lick in almost a decade, growing 3.1% in October. Scant surprise, then, that the statistics were greeted by a Trump tweet declaring: “Wow, these are incredible numbers. Keep it going, vote Republican.”

In politics, perception is all, and Trump has been relying on voters perceiving that the rude health of the economy is down to him and his policies.

The reality is arguably different. When Barack Obama entered the White House in 2009, the US was facing its gravest economic crisis since the Great Depression. By the time Trump succeeded him last year, virtually every US economic indicator was pointing upwards. Wage growth, consumer confidence, home sales, productivity and employment had been rising for seven straight years. The Federal Reserve’s policy of quantitative easing had injected $4 trillion into the economy and husbanded it through the worst of the global recession.

Obama’s education and environment policies had also bequeathed his successor with a better-trained workforce and a booming sustainable development sector throwing off hundreds of thousands of jobs and tax dollars.

If Obama’s legacy was to hand the economy to Trump on a “golden tray”, what has Trump done with it since? He has cut taxes, deregulated large swathes of business, set about dismantling the sustainable sector and changed the chairman of the Fed. And he has picked trade wars with half the world, including China and America’s biggest erstwhile ally, Europe.

The respected Center for Economic Policy Research has compared the performance of the US economy with a composite of its international rivals and concluded that the Trump administration has had a “negligible impact” on America’s macroeconomic performance. Far from his policies accelerating growth and increasing job creation, the organisation found that Trump had inherited “the greatest economy ever”.

Trump’s signature policy of tax cuts has mainly benefited the corporate sector and the better off, making it hard to gauge the impact of this “sugar high” on the living standards of the average American voter.

But what we do know is that his tax cuts have also blown an alarmingly large hole in US public finances with the federal budget deficit projected to soar above $1 trillion next year.