A Bad Fact-Check On Economic Growth

Fact-checking blogs are currently facing a backlash. Criticisms are sometimes unfair, but the worst “factcheckers” clearly stray into assessing subjective statements or else rule that people are being misleading based on tiny oral deviations. As such, they confuse debate, rather than clarifying it.

Usually, the Washington Post’s fact-checker is much better and truly assesses verifiable claims. That’s what makes this statement from last night’s State of the Union fact-check blog noticeable.

As part of its assessment of Trump’s claims on growth, the WaPo team wrote:

GDP growth has averaged 2.8 percent per quarter so far in Trump’s presidency, not much higher than Obama’s average of 2.1 percent for his two terms in office.

Though both numbers look similar, no economist would claim that 2.8 percent annual GDP growth is “not much higher” than 2.1 percent. It’s a third higher!

And the point about economic growth is that it compounds over time. If we had growth of 2.1 percent over a 10-year period, real GDP would be 23 percent higher by the end of the decade. If we enjoyed 2.8 percent growth over a 10-year period, it would be 32 percent higher.

With a 2.1 percent growth rate, GDP would double after 33 years; with 2.8 percent growth it would double in just 25 years.

You get the point.

There’s of course a big question as to whether the higher growth the economy has experienced under President Trump is sustainable. That is, whether it represents an increase in the underlying potential growth rate of the economy or is a cyclical phenomenon driven by changes in fiscal policy.

But the improvement has been marked and should not be downplayed.