How much credit should Trump get for the economy?

President TrumpDonald John TrumpTrump calls Sri Lankan prime minister following church bombings Ex-Trump lawyer: Mueller knew Trump had to call investigation a 'witch hunt' for 'political reasons' The biggest challenge from the Mueller Report depends on the vigilance of everyone MORE and the Republican Congress are putting economic stewardship at the center of their midterm messaging, hoping to reap the election rewards from the steady growth in jobs, strong consumer confidence and a bullish stock market.

Trump is taking full responsibility for boosting the economy he inherited from former President Obama, boasting that his policies, including the tax-cut bill signed in December, are driving a faster expansion.

ADVERTISEMENT

The Dow Jones industrial average has gained 8,000 points since Trump became president and the unemployment rate is 4.1 percent — a 17-year low.

Hundreds of firms have announced plans to expand their businesses and provide bonuses to their employees since the passage of the bill, which cut the corporate rate from 35 percent to 21 percent.

Perhaps most importantly for the economy, consumers are spending.

“This is our new American moment,” Trump said Tuesday during his State of the Union address. “There has never been a better time to start living the American dream.”

More good news could be on the way for Trump, as economic growth is forecast to pick up, with the jobless rate possibly falling to the mid-3 percent range. This could also lead to higher wages, something that has yet to really be seen since the last decade’s recession.

Mark Zandi, chief economist with Moody’s Analytics, said the economy is heading into “rarefied territory.”

“It’s never gotten out of the mid-3s without suffering a recession,” he said of the jobless rate, “so this is going to be a bit tricky.”

Zandi warns that the risk of a recession will be greatest in 2020, the next presidential election year.

Not every aspect of the growing economy paints a rosy picture.

Beyond stagnant wages, economic growth remains below the coveted 3-percent target set by the Trump administration, and income inequality remains a problem.

“We have to admit that the true economy, just looking at the raw data, has been doing pretty darn well,” said Steve Bell, a former Republican staff director for the Senate Budget Committee.

“But we’ve had almost no wage growth, productivity has been flat and this has tended to increase, not decrease, the inequality problem.”

Despite all the enthusiasm from Trump about the economy, U.S. economic growth made a surprise slowdown in the final three months of last year, falling to 2.6 percent.

Growth was 2.3 percent for 2017, an improvement on 2016, but below the expectations set by Trump.

Still, consumers feel confident enough in the economy’s future to increase their debt on credit cards, pricier mortgages and big-ticket items.

And if they’re feeling better about the economy, that could translate into more support for Trump and congressional Republicans, who are now facing stiff midterm headwinds.

The U.S. is also benefiting from one of the best global expansions in at least a decade, which is being fueled by the European Union’s steady rebound and the growth of developing economies.

Businesses do fear repercussions if Trump follows through on threats to pull the U.S. out of the North American Free Trade Agreement (NAFTA), warning of the severe damage it could do to U.S. agriculture and the broader economy.

While the president has insisted he would craft better agreements for Americans, GOP senators and business groups have ramped up pressure on Trump to preserve NAFTA, even while some Democrats skeptical of trade deals applaud his efforts.

A recent study released by the Business Roundtable found that the U.S. would shed 1.8 million jobs in the first year after leaving NAFTA.

Instead, businesses have applauded Trump’s efforts to slash scores of federal regulations, and have cited key benefits from removing the red tape. Trump has homed in on rules constraining the fossil fuel industry, banks, medical facilities and colleges.

Democrats face some risks in pushing back at Trump’s message on the economy.

Unlike Obama, who some Democrats think was too cautious in promoting economic gains under his stewardship, Trump is not shy about tying good economic news to his leadership. Republicans have already slammed Democrats for talking down the economy when they have raised questions about nagging concerns, from low wage growth to income inequality.

On Tuesday, Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerHillicon Valley: House Dems subpoena full Mueller report | DOJ pushes back at 'premature' subpoena | Dems reject offer to view report with fewer redactions | Trump camp runs Facebook ads about Mueller report | Uber gets B for self-driving cars Dem legal analyst says media 'overplayed' hand in Mueller coverage Former FBI official praises Barr for 'professional' press conference MORE (D-N.Y.) took the tack of crediting Obama for the gains — and not Trump.

“If you’re going to pat yourself on the back, give a shoutout to Barack ObamaBarack Hussein ObamaJuan Williams: Buttigieg already making history Obama condemns attacks in Sri Lanka as 'an attack on humanity' Trump hits Romney for Mueller criticism MORE because he did even better than you in job creation,” he said.

A year into Trump’s presidency, polls continue to show more Americans crediting Obama for the economy than the current president. A Washington Post-ABC News poll this month found 50 percent believed Obama’s administration deserved credit, compared to 38 percent who credited Trump’s government.

While that division could be a sign of polarized times, it also points to a potential valuable argument for Democrats.

Still, Republicans believe those views could change as Trump’s presidency lengthens. They also think their tax-cut bill will become more popular if wages do grow and companies do bring profits from overseas back to the United States to invest.

Some wonder whether the profits will instead go to stockholders.

“Will the tax cut lead to a palpable increase in productivity and wage growth? We don’t know the answer, but really smart people are worried,” said Bell, citing concerns over a massive round of stock buybacks with few benefits for workers.

“It’s the key to the whole tax-cut notion.”