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The economy and the election: Answering your questions

Readers want to know what makes for a booming economy and what effect President Trump has had.

Text 'ELECTION' to 215-544-3038 to receive daily messages on key issues.
Text 'ELECTION' to 215-544-3038 to receive daily messages on key issues.Read moreJARED WHALEN / Staff

We've received a variety of questions from readers this week responding to our election text alerts about the economy, jobs, and taxes.

Two common themes have emerged: Readers want to know what, exactly, makes this a "booming" economy, and how President Trump's policies have contributed to the strong growth and low unemployment numbers.

These are complicated questions that are best answered by people smarter than us, so we took them to economics experts. Here's what they said.

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What makes this a ‘booming’ economy?

By several measures, this is an objectively strong economy. The unemployment rate fell to 3.7 percent in September, the lowest in nearly 50 years. Real gross domestic product, which measures the values of goods and services, grew 4.2 percent in the second quarter of 2018, the fastest since 2014. Consumer confidence is at its highest level in 18 years.

"The big picture is things are getting better. It took a long time, but they're pretty good now," said David Wessel, senior fellow in economic studies at the Brookings Institution. "But that doesn't mean they're good for everybody."

For example, wages are rising faster for those at the lower income level than those in the middle, Wessel said, in part because some states raised their minimum wage. Younger people who had the misfortune of entering the workforce during the Great Recession have struggled to find good jobs, and fewer of them own homes than young people in previous generations, he added.

And job gains largely haven't translated into pay raises. Wages grew 2.8 percent in September, which is still below what economists would expect with such low unemployment. That could be a reason some don't feel like they're benefiting from the booming economy, said William Stull, a Temple University economics professor.

"If you were working a full time job already, then your wages probably haven't gone up much and the increasing tightness in the economy really hasn't helped you that much," he said.

Do Trump and Republicans deserve credit?

With the midterm elections approaching, Republicans say their policies have sparked increased hiring and investment. Democrats argue Trump inherited the strong economy from former President Obama.

They're both right, experts said. For example, the unemployment rate has steadily fallen from the post-recession high of 10 percent in 2009.

"The economy had a lot of momentum coming into the 2016 election," Stull said. "Having said that, I personally feel if you look at the whole combination of Trump policies, they have probably contributed something to keeping the boom going."

The Republican rewrite of the federal tax code, which slashed tax rates for corporations and individuals, as well as the Trump administration's rollback of regulations, gave businesses confidence about the future and led them to continue hiring, experts said.

But those experts said the timing of the tax cuts was irresponsible economic policy. Adding a fiscal stimulus to an already strong economy could spur a rise of inflation, they warned.

"When [the economy] is at full employment, you don't goose it up more," said Mark Kuperberg, a Swarthmore College economics professor. "There will be a reckoning in the future, but that future is past November."

Other questions

The following Q&A comes from some other questions we received this week:

Have the good [economic] numbers impacted the local Philadelphia poverty and unemployment rates?

Despite strong job growth, most Philadelphia households earn less than comparable households did a decade ago, according to a study released Thursday. That's because many workers in the city are earning low pay and not getting enough hours on the job, according to the report from the Keystone Research Center.

The unemployment rate in Philadelphia as of August is 6 percent, the lowest since 2000, when it was 5.8 percent, the report said. That's down from a post-recession peak of 10.9 percent. However, household incomes fell in 2017, the poverty rate didn't budge and the share of people in "deep poverty" increased, the report said.

What is Trump doing with Medicare and Social Security?

During his presidential campaign, Trump promised he wouldn't cut Social Security or Medicare, though his proposed fiscal 2019 budget — which didn't become law — would have trimmed the programs. The proposal would have cut Social Security by $25 billion — less than one-fifth of one percent — while the proposed Medicare savings would have meant "little or no change for beneficiaries," experts told Politifact. Congress had already approved a two-year spending deal, so Trump's budget blueprint was largely a political statement.

Congressional Republicans, however, have signaled they want to make larger changes to entitlement programs. A House Republican plan would give seniors the choice of private plans that would compete with Medicare, the Washington Post reported. That would take $537 billion out of Medicare, according to the report.

Senate Majority Leader Mitch McConnell (R., KY) recently told Bloomberg that entitlement spending, including Social Security and Medicare, is driving federal deficits, and requires a bipartisan solution.

How about the recently announced 10 percent tax cut? Fact or fiction?

Trump has begun touting a new plan to cut taxes for the middle class, suggesting a 10 percent rate reduction could be done "next week." But such a vote — if it occurred at all — would likely be a symbolic one, according to the Washington Post. White House advisers have reportedly discussed having Congress vote on a non-binding "resolution" for a future 10 percent tax cut for the middle class.

You can still sign up for our election alerts by texting the word "ELECTION" to 215-544-3038. Next week, we'll break down how health care policy is playing out in local races.