The Trump Economy Is Strong. So Why Exaggerate?
(Bloomberg Opinion) -- There’s no denying that, since Donald Trump was sworn in as president in January 2017, the U.S. economy has been doing quite well. Growth in real gross domestic product has been steadily accelerating. (This chart and the next track year-over-year growth instead of the more commonly reported quarterly or monthly changes because that makes it easier to see trends.)
Strong job growth has also continued, with gains in nonfarm payroll employment even accelerating a little this year, which is pretty remarkable this deep into an economic recovery.
I started this chart in 2011 and the previous one in 2010 simply to avoid the big negative numbers of the Great Recession, which make it harder to see trends in the positive numbers since then. GDP started growing after the recession well before employment did, which is why the start years are different.
All those job gains since 2011 have kept the unemployment rate low and, more important, kept the employment-population ratio among prime-age workers rising.
The employment-population ratio is more important than the unemployment rate because, as President Trump pointed out again and again during the 2016 election campaign, the latter doesn’t count people who have stopped looking for jobs. This long expansion (if it lasts one more year, it will be the longest ever) has been pulling people by the millions off the sidelines and back into the labor force — although, as is apparent from the above chart, the prime-age employment rate is still below the previous expansion’s peak.
This rising employment rate is important to keep in mind when contemplating perhaps the least encouraging economic trend of the past couple of years: stagnant wages.
Remember, though, that there are a lot more Americans working now than there were at the beginning of 2017 — 3.4 million more according to the establishment survey from which payroll statistics are derived, 3.9 million more according to the household survey that’s used to calculate the unemployment rate. A lot of those people are joining the labor force after long layoffs or for the very first time. They’re generally not getting high-wage jobs, and that’s weighing on average and median wages. But they’re getting jobs!
One group that has benefited especially from the long recovery has been black Americans. Blacks are more likely to lose their jobs in downturns than whites, but they’re also more likely (relative to their share of the working-age population) to get hired when the economy is growing. Long economic expansions are good for everybody, but they’re especially good for blacks.
Which brings me to something false that White House Press Secretary Sarah Sanders said Tuesday about black employment, claiming that it had risen by 700,000 since her boss had taken office and by only 195,000 during Barack Obama’s entire time as a president. The first number is correct (black employment is up by 708,000 since January 2017), the second not even remotely so (actual number: 2.96 million). Sanders later tweeted an apology for getting the “time frame” wrong, although I wasn’t able to find any time frame during the Obama years for which black employment had risen exactly 195,000 from when he took office. The White House Council of Economic Advisers tweeted out some stats of its own, which appear to be factually correct but (1) didn’t match what Sanders had said and (2) took the dubious approach of measuring job gains from when the president was elected, which saddled Obama with two more months of Great Recession job losses that weren’t even remotely his fault.
Anyway, here are the actual stats on black employment gains, measured year-over-year as in the first two charts to make trends clearer:
These numbers jump around more than those in the earlier job growth chart because they’re from the noisier household survey; the establishment survey does not ask employers about workers’ race or ethnicity. But they generally show solid, if not accelerating, job growth for blacks, which has averaged 39,333 a month since Trump took office, compared with 30,781 a month during Obama’s two terms. That comparison seems a little unfair, given that Obama took charge in the middle of the worst recession in three-quarters of a century and Trump did not. But it is factual evidence that the Trump administration could cite to back up the assertion that the strong economy is helping black Americans. Yet more factual evidence: The employment-population ratio for blacks since Trump took office surpassed its highs of the previous expansion.
Trump and his staffers and supporters, though, seem incapable of sticking to these facts. All administrations try to put the sunniest possible spin on economic statistics, but this administration is committed to impossibly sunny spins — like the president’s claims after last month’s GDP report of “an economic turnaround of historic proportions” and a rate of job growth that would have been “unthinkable” before he took office. All it takes is a quick glance at the charts in the column to see that these assertions are balderdash.
Which leads to an odd situation. The economy is doing well, yet a large share of media coverage of the economy involves correctly pointing out that it’s not doing nearly as well as the president and his minions say it is. Perhaps this is part of a grand plan by the president to rouse his most fervent supporters and make them hate the mainstream media even more than they already do. But Trump has been wildly exaggerating his own personal economic success for decades now, so I’m guessing it’s mainly just that he can’t help himself. I also don’t think it’s working for him. Polls continue to indicate that Trump is remarkably unpopular for a president presiding over such good economic times. If the economy slows markedly, or goes into reverse, his claims that everything is coming up roses will surely go over like a lead balloon.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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