Joe Scarborough wants you to believe that the economy of Jimmy Carter’s “Malaise” era was greater than the Trump economy.
I swear I am not making this up.
The Morning Joe host was set off by Trump’s repeated claims that this is the greatest economy in U.S. history.
Before introducing Trump’s former White House Communications Director Anthony Scaramucci, Scarborough revealed that he was “obsessed” with a graphic that compared economic growth under Trump to that under Presidents Bill Clinton and Jimmy Carter at the same time in their administration. That graphic:
“All we hear, on repeat is what Donald Trump says about the economy,” Scarborough mocked. “Greatest economy ever, strongest economy ever.” After lauding Barack Obama for never talking about “how strong the economy was on the rebound” after he inherited the Great Recession, Scarborough turned to praise Jimmy Carter.
“Look at Jimmy Carter in ‘79. This was supposed to be the year of malaise,” Scarborough said. “The year of malaise, and during Jimmy Carter’s so-called year of malaise, he was doing — his economy doing a lot better than Donald Trump. So why is it that there’s such a disconnect between, not only Donald Trump’s reality but also the talking points that the press regurgitates without thinking twice?”
So what did Scarborough get wrong? Just about everything.
While it is true that the economy grew faster under President Carter, the economy’s rate of growth is not a full measure of the economy’s strength. For one thing, growth should be measured against potential growth–the long term growth rate of the economy. For another, any measure of the economy should also take into account the unemployment rate, inflation, and interest rates.
Carter’s 3.16 percent GDP growth in 1979 was burdened by 5.9 percent unemployment and an eye-popping 11.25 percent rate of inflation. Donald Trump’s 2.3 percent growth in 2019 was achieved with just 3.7 percent unemployment and 1.8 percent rate of inflation.
There is a more formal way to compare the economic periods called a “misery index.” Ironically, it was popularized Carter himself, who used it to relentlessly attack Gerald Ford. It was invented by economist Arthur Okun, an adviser to Lyndon Johnson. In its simplest form, the misery index ads unemployment to inflation to take the measure of the economy. The highest the score, the more the misery and the worse the economy.
So how do Carter and Trump fare on the misery index test?
- Carter Misery Index 1979: 5.9 + 11.25 = 17.15
- Trump Misery Index 2019: 3.7 + 1.8 = 5.5
The index was later modified by Harvard economist Robert Barro to create the Barro Misery Index. In addition to the original misery index, the BMI includes both long-term interest rates as well as the deviation of growth from long-run potential. Its meant to be a more comprehensive view of the economy. Barro originally wanted to use it to show change over a multiyear period to compare how a president performed given the situation when he came into office but we can also use it to compare presidents between years.
So take Carter’s unemployment rate (5.9) plus inflation (11.25) plus the 30-year Treasury rate (9.28) minus GDP growth (3.1) plus long-term potential growth in 1979 (3.1). That gives us a Carter modified misery index of 26.43.
Now to Trump. Unemployment (3.7) plus inflation (1.8) plus 30-year Treasury rate (2.58) minus GDP growth (2.3) plus longterm potential in 2019 (1.75). That gives us Trump modified misery index of 7.53.
In other words, Trump’s economy is much, much better than Carter’s by this measure.
Beauty is in the eye of the beholder. And in many ways, so is the strength of the economy. Scarborough can, if he wants, claim that growth is all that matters when judging a president. But for most people, growth is just one part of what makes up a great economy.