More on What Trump Could Have Meant

As I noted in yesterday’s post, in Mr. Trump’s speech at the Economic Club of New York Tuesday, he made a mysterious claim:

…we’ve added nearly $10 trillion of new value to our economy. That’s in a short period of time. Remember, I only use numbers from the time of the election because I can’t go to January 20th. It’s not fair. We picked up tremendous stock market and economic numbers. They actually went wild the day after I won.

I puzzled over the $10 trillion figure. Reader Joseph has conjectured that Trump was working off the Wilshire 5000 index, in which each point equals roughly a billion dollars of capitalization. Indeed, the change in the index from the day before the election and latest is $10.0 trn. However, the Wilshire 5000 is not comprehensive, and includes equities held by nonresidents. Let’s compare to the Fed’s Flow of Funds data to the Wilshire 5000.

Figure 1: Value of equities held by households (blue), Wilshire 5000 (brown), both end-of-quarter, in billions of dollars, on log scale. Source: Federal Reserve Board Flow of Funds, and Wilshire Associates, both via FRED, and author’s calculations. 

What is the implied change in value of equities from before the election to 2019Q3 held by Americans? This is shown in Figure 2.

Figure 2: Value of equities held by households according to Flow of Funds (blue), Wilshire 5000 (brown), both end-of-quarter relative to end-of-quarter 2016Q3 in billions of dollars. Flow of Funds estimate for 2019Q3 is based log-log first differences regression using SP500 for extrapolation. Source: Federal Reserve Board Flow of Funds, and Wilshire Associates, both via FRED, and author’s calculations. 

End-of-quarter Wilshire 5000 figures indicate $8 trillion change, while corresponding Flow of Funds iindicate only $4.6. This differential at end-2019Q3 suggests that Mr. Trump’s estimate is nearly double the actual change in household equity holdings.

So, I re-iterate, whatever happened to fact checking economic statistics in the White House?

27 thoughts on “More on What Trump Could Have Meant

  1. Barkley Rosser

    I apologize, folks, that I am going off-topic, which I generally disapprove of. But I must note that Nancy Pelosi, (denounced on a regular basis by the most frequent poster here as “senile”), has now clearly defined a clear impeachable offense: bribery, litterally spelled out in the Constitution as an impeachable offense along along with “treason” and the more publicized but arguably vague “an pu crimes and misdemeanors.” II have long argued that Trump should impeached for violating the Emoluments clause, but I now recognize that House Speaker Nancy Peloisi is wiser than I am that focusing on “bribery” nails in all of this and should be clear to the American public why Trump should be impeached.

    1. Moses Herzog

      Pelosi is a “fast learner”.

      Especially as we know the delay on starting the impeachment inquiry delays court decisions which have the chance of opening redacted portions of the Mueller Report, delays getting the REAL Zelensky phone call transcript (and what other secrets??) off the NSA server, delays the possible opening of donald trump’s tax returns on a very limited time clock going into November 2020 and delays impeachment procedures yet to be started in the Senate and that SOME people insist should be done before the true election season starts (which I take to mean early February).

      As late as June 2019 Pelosi was saying she didn’t think donald trump should be impeached. Pelosi finally made the move in LATE September 2019.

      Yet some very slow minded parties on this blog think it’s a “significant stroke of genius” to change the terminology used or the semantics used from “quid pro quo” over to bribery. Wow, very “insightful” on her part. There were journalists and other legislators who were already hammering this point that bribery was easier lexicon to sell to the public, and I could have found a 14 year old girl schooled in basic debate to tell you that Barkley.

      1. Barkley Rosser

        Oh great, more dumbaass drivel out of you, Moses.

        Pelosi’s timing looks just about right. There was poor public support for impeachment prior to when Pelosi moved on it, which was triggered by the publicity over Trump’s phone call to Zelensky on 9/25. You and I may think she should have moved earlier on emoluments, but Trump is right, which Pelosi undersrtands also, that most people have never even heard the word “emoluments,” much less know what it means or that there is something in the Constitution forbidding them. Too complicated.

        As it is, the GOPsters have whining that Trump has not been accused of something linked to impeachment in the Constitution. Pelosi has now made that link with shift to talking about brribery, and doing it just as the impeachment hearings have gone public looks like excellent timing.

        As for your claims that moving on impeachment sooner would have sped up various court cases, this looks like just fantasyland delusions on your part. But then somebody who keeps insisting that Nancy Pelosi is “senile” is clearly not remotely in touch with reality (although I do generally respect what you have to say about China, really).

        1. Barkley Rosser

          BTW, even now support for impeachment is weak, just barely beating out opposition to it. So far that support has not moved at all either way, although maybe Trump’s idiotic tweet attacking Amb. Yovanovich in the middle of her testimony yesterday might budge it. But GOP-leaning Rasmussen claims support for Trump (not over impeachment, per se) has risen from 46% to 50% in the days since the hearing started. It remains unclear whether he will gain or lose from being impeached, but it is extremely unlikely he will be convicted by the Senate.

          So, again, Dems in House needed to do this, but Pelosi has been stage managing what is a very mixed bag about as well as anybody could. Not a shred of evidence to support your insane claim that she is senile.

          1. pgl

            The testimony of David Holmes last night was very damaging to all the GOP talking points (aka lies). I hope he testifies in the public hearings.

          2. pgl

            “Not a shred of evidence to support your insane claim that she is senile.”

            Could Uncle Moses be just another Bernie Bro? He does have a serious problem with strong woman leaders. Sort of Trumpian in that way.

          3. Barkley Rosser


            Unfortunately his problems with women run much deeper than just being a bad Berniebro (which he does seem to be) Heck, there is a lot I like about Bernie.

            So recently he has been criticizing various people as ones who did not get a date for the prom, but then he up and tells us he did not have a date for the prom. I do not know the age of “Uncle Moses,” but I gather it is less than my senior citizen 71 and more than a Gen-Z person, given him sneering at them for being young whiners. In any case, he is probably several decades past his high school prom, but he is telling us how he did not get a prom date? Yes, I suspect this is linked to his bizarre dissing of several powerful older women, and it certainly is pathetic in the extreme.

          4. Moses Herzog

            @ Barkley Junior
            I believe if you go back and check those comments, you’d find it was your “friend” pgl who criticized people who didn’t get a date for the prom, not me. Shall I find the comment for you barkleyJunior?? Or is it pointless, sense you’ve once again verified how near to senility you are. BTW, it was a woman pgl was referring to, related to the prom date. But I guess pgl has you and Menzie’s permission to attack women such as Tulsi Gabbard and Kellyanne Conway and I don’t (at least not without being labeled in the process). Hopefully Menzie will not filter this comment, or at least allow me to defend myself, sense lies against me appear not to phase him in the least. I guess since some lies are acceptable to Menzie against me, I should have lied and told Menzie I have PhD, maybe he would “run to my defense” as he does some others here.

          5. Menzie Chinn Post author

            Moses Herzog: Attacks are flying all over the place. If I censored all comments with attacks on personality/intelligence/character, there would be very few published comments. However, attacks using language of a sexist/racist/homophobic nature will be censored by me. That is of course a judgment call — but it is my perogative, as long as Jim premits me to contribute to the blog.

      2. pgl

        “Yet some very slow minded parties on this blog think it’s a “significant stroke of genius” to change the terminology used or the semantics used from “quid pro quo” over to bribery. Wow, very “insightful” on her part. There were journalists and other legislators who were already hammering this point that bribery was easier lexicon to sell to the public”.

        Not on Faux News until she made the point. Now just imagine if the Faux News crowd turns against Trump. Yes it could happen and if so, he is dead man walking. BTW – have you been actually listening to the Republicans at these hearings. They keep repeating the same worn out lies. WHY? Precisely to get them on FAUX News. If you think everyone is watching MSNBC coverage 24/7 – you are more senile than any person in Congress.

    2. John Smith

      Isn’t ALL foreign aid basically “bribery”? The US always expects something in return, even if it’s only future business and cooperation. Or did you think that foreign aid is simply given out of the goodness of our heart? Bless your little cotton socks.

      Pelosi will have a hard time making a “bribery” case and will more likely end up with yet another Nothing Burger to add to her huge collection.

  2. Willie

    Trying to figure out where Trump’s garble got started is and interesting and probably useful exercise. If there really is an underlying source he misunderstood, misapplied, and exaggerated, then finding it lends insight into where he finds undigested scraps of information.

    And off topic – Pelosi has played this whole round as well as she could have, given the fractious nature of the Democratic Party and the constraints the courts and the Senate could place on availability of information.

  3. pgl

    According to the Federal Reserve’s Flow of Funds data, net wealth (assets – debt) rose by just over $7.7 trillion since 2016. I guess you could justify the $10 trillion figure in a couple of ways:

    (1) Rounding up; or

    (2) Bruce Hall arithmetic where the increase in wealth = the increase in assets. Ah yes, Bruce Hall is a lot like Donald Trump. Ignore all that debt!

  4. SteveS

    It is a fool’s errand to try to look for a “meaning” behind something Donald Trump may have said. Truth is not in the man. End of story.

    1. baffling

      this is the truth of the story. when trump needs a break, he simply makes an offhanded lie and lets the media and critics spin their wheels trying to decipher and prove him wrong. you must understand, he does not CARE if he is right or wrong, as long as it buys him time while you waste your energy. it is his version of dance, monkey, dance. his base does not care if he lied, and the vast majority of americans do not appear smart enough to comprehend the magnitude of his egregious ways. rick stryker clearly articulated this way back, but most of us on this blog simply refused to acknowledge the united states could elect and accept a fundamentally dishonest and ethically corrupt president. in this case, rick was right and we were wrong. many americans, led by the conservative right movement, have no problem with dishonesty and a lack of ethics if it achieves our means.

  5. Jan P Perlwitz

    Trump may have got the number from the change in net worth of US households and nonprofit organizations, depending on what quarters he compared. That doesn’t include only equities in the stock markets or financial assets in general. According to Federal Reserve: total net worth of those entities in Q4 2016: $96.9 trillion , Q4 2018: $106 trillion, Q2 2019: $113 trillion. This makes a difference of $9.1 trillion and even $16.1 trillion, respectively.

    Now, my question would be how much of the increase in net worth of households and nonprofits was an actual increase in real wealth, and how much was an increase in fictitious wealth by adding mere book value by selling things, e.g., claims on (virtual) paper on future cash flows of corporations, in circles to each other and attaching a higher price tag at every transaction on average. Based on Trump’s statements, he probably believes real value was created by latter, for instance that real value was created merely by price inflation in the stock markets. My impression, which is subjective of course, is that such belief is actually quite common.

    1. pgl

      Nice chart which tracks asset, liabilities, and their difference (the latter being the proper measure). And yes a real increase is certainly less than a nominal increase since the price-level has risen over the past 3 years!

    2. pgl

      I would add what Robert Barro might say about all of this. I’m thinking of the conservative Harvard economist who wrote a paper on Ricardian Equivalence. Over the past three years, the Federal debt has risen by $2 trillion. Barro would argue that households would see that as a $2 billion increase in liabilities not captured by these Flow of Fund accounts.

  6. joseph

    “According to the Federal Reserve’s Flow of Funds data, net wealth (assets – debt) rose by just over $7.7 trillion since 2016. I guess you could justify the $10 trillion figure in a couple of ways: Rounding up … “

    No, it isn’t rounding up. Trump doesn’t care about flow of funds. Flow of funds is a balance sheet including assets and liabilities. Trump only cares about his constituents’ portfolio value, that is, the stock price. Stockholders don’t care about the balance sheet, at least in the short term. They measure their daily wealth by the market price, the value of their portfolio. The value of that portfolio, in aggregate, has increased by $10 trillion. That isn’t rounding. That is a fact.

    The confusion here is in Trump’s use of the phrase “new value to the economy.” Trump and his friends don’t care about flow of funds, assets and liabilities. They only care about their personal wealth today as measured by their portfolio value. To Trump, personal wealth is the economy. Nothing else matters. When the stock market goes up by $10 trillion, the folks at the top, who own most of the stock, are trillions wealthier, at least on paper.

    Yes it’s a stupid metric for the US economy in general, but it makes perfect sense to Trump’s audience. They really are trillions wealthier.

    The fallacy here isn’t the $10 trillion number. It is the correct number for the increase in dollar value of the stock market. And it is a number that is very important to Trump’s constituency. The fallacy is in equating the stock market to the economy.

    There’s an old saying that the stock market is not the economy and the economy is not the stock market. This is where Trump went wrong, although in the limited case of his constituents’ interests, not so terribly wrong. They care less about the economy than they care about their own brokerage accounts.

    1. pgl

      Ah yes – Trump’s supporters are either self absorbed billionaires or really dumb people. As Hillary said “a basket of deplorables”!

  7. Moses Herzog

    I rarely go on Twitter anymore, but thought this was one of the better tweets I’ve seen in awhile:

    Republicans keep saying that the Ukrainians got the military/aid. My question is, if a child’s parents catch the child in the middle of the act of taking 5 cookies out of the cookie jar already designated for other siblings, if the child puts the 5 cookies back, does that mean the child did nothing wrong??

    1. 2slugbaits

      Republicans also don’t seem to know why Obama didn’t provide Ukraine with Javelin missiles despite State Department recommendations to do so. The short answer is because the Pentagon objected to giving Javelins to Ukraine. Corruption was so rampant that the DoD was concerned some of the Javelins would end up in a Moscow laboratory. It was only after the Pentagon was convinced that Putin friendly elements in Ukraine would not be able to sell Javelins to the Russians that the Pentagon concurred in the sale. Funny that those facts never seem to find their way into Republican talking points.

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