Trump is putting out 4 big whoppers
about today’s economy. Here’s what he’s saying, and here’s the truth:
1. “Best job growth ever.” Wrong.
Job growth has actually slowed. In the last 19 months of the Obama
administration the economy created 3.96 million jobs. In the first 19 months of
Trump’s, 3.58 million.
2. “Lowest unemployment rate
ever.”
Rubbish. The unemployment rate is now down to 3.9 percent. That’s good. But it doesn’t measure how many people are still too discouraged to look for work or are working part time who’d rather be working full time. The labor participation rate (percent of prime working age work who actually have jobs) has been stuck at 88.9 percent for over a year.
Rubbish. The unemployment rate is now down to 3.9 percent. That’s good. But it doesn’t measure how many people are still too discouraged to look for work or are working part time who’d rather be working full time. The labor participation rate (percent of prime working age work who actually have jobs) has been stuck at 88.9 percent for over a year.
And the current 3.9 percent rate is
hardly better than ever in history. It was 3.4 percent in 1968 under Johnson,
and below 3.9 percent for much of 1951, 1952, and 1953, under Eisenhower.
The practical question is always how low the Fed will allow unemployment to fall before raising rates, for fear of inflation. In 1996, unemployment fell to 4.4 percent, but Fed Chair Alan Greenspan then raised rates.
This time around, Fed Chair Janet Yellen and her successor Jerome Powell have been quite accommodating, but Powell is starting to raise rates again.
3. “Fastest economic growth in
history.”
Wrong again. The economy is now growing at annualized rate of 4.2 percent (that’s for the 2nd quarter). That’s not as good as the 5.1 percent and 4.9 percent achieved in 2 quarters in 2014, or the 4.7 percent in one quarter in 2011. During the Clinton years of 1997-1999, it grew by over 4.5 percent annually. Under Reagan, the recovery averaged 4.4 percent a year. Under Eisenhower, even faster.
Wrong again. The economy is now growing at annualized rate of 4.2 percent (that’s for the 2nd quarter). That’s not as good as the 5.1 percent and 4.9 percent achieved in 2 quarters in 2014, or the 4.7 percent in one quarter in 2011. During the Clinton years of 1997-1999, it grew by over 4.5 percent annually. Under Reagan, the recovery averaged 4.4 percent a year. Under Eisenhower, even faster.
4. “Best wages, ever.”
Not even close. Today’s hourly wage has less purchasing power than it did over four decades years ago. Adjusted for inflation, the average hourly wage in January 1973 would be $23.68 today. Yet today’s actual average hourly wage is $22.73. And, of course, the lion’s share is going to the top.
Not even close. Today’s hourly wage has less purchasing power than it did over four decades years ago. Adjusted for inflation, the average hourly wage in January 1973 would be $23.68 today. Yet today’s actual average hourly wage is $22.73. And, of course, the lion’s share is going to the top.
Trump is having only one positive
impact on the economy: His continuous P.T. Barnum lies about how good it is
have improved consumer confidence. Which I suppose is good – until, like the
character in the road-runner cartoons, consumers look down and realize there’s
nothing under them.
Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and "Beyond Outrage," and, his most recent, "The Common Good," which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.