I&I Editorial
The most surprising thing about the latest unemployment report isn’t that the rate dropped to the lowest level since December 1969. It’s that unemployment wasn’t supposed to get anywhere near that low under President Trump. At least, not if you believed mainstream Keynesian economists.
The economy created 136,000 jobs in September, according to the Bureau of Labor Statistics survey of businesses. The separate household survey, which is used to track unemployment, showed that the number of unemployed dropped by 275,000.
Not only did the job market pull 275,000 off the unemployment line last month, it pulled more than 100,000 who had dropped out of the labor force back into the job market.
This is good news, but it continues to confound mainstream economists, who solemnly predicted at the start of Trump’s administration that we faced a “secular stagnation.” Any talk of strong economic growth was a fantasy.
When the economy started to outperform expectations, liberals shrugged it off by claiming that the upturn in growth was all baked in the cake when President Obama was president.
That is false.
We can get a sense of the true impact of Trump’s economic policies by comparing the actual results since he took office to the forecasts made at that time. What did economists think the economy would be like if nothing changed over the next 10 years in terms of tax rates or regulatory policies
For the purpose of comparison, we used the Congressional Budget Office’s 10-year economic outlook released in January 2017. The CBO’s economic forecasts tend to mirror the consensus of other economists.
The results of this comparison are stark.
GDP growth has exceeded the CBO’s forecast in every quarter starting with Q2 2017. That includes the second quarter of this year, which saw 2% growth where the CBO had projected 1.5%.
As a result, the economy is now $590 billion bigger than it was supposed to be.
The CBO projected that unemployment would never get below 4.4%, and would start rising again this year. Instead, the unemployment rate fell from 4% at the start of the year to 3.5%. The current unemployment rate is now a full percentage point below the CBO’s forecast. That translates into 1.6 million more people employed than the CBO expected.
And, where the CBO had forecast a steady decline in the labor force participation rate – which measures what percentage of the working-age population is either employed or looking for a job – it has been climbing. The CBO projected it would go from 62.9% at the end of 2016 to 62.7% in the last quarter.
The actual figure for September was 63.1%.
Oh, and inflation has been running slightly lower than expected – which wasn’t supposed to happen either. A typical headline about the Trump economy was the one in the Wall Street Journal shortly after he won the election, which said, “Inflation and Interest Rates Forecast to Rise Under Trump Presidency.”
If Trump were a Democrat, the news media would be shouting hosannas from every rooftop – instead of braying for Trump’s impeachment.
So what changed after the CBO issued its forecast? Trump reversed as many Obama-era policies as he could, as fast as he could. He halted pending regulations, rolled back more than $30 billion of existing rules, brought corporate tax rates in line with our competitors, fixed the worst elements of Dodd-Frank.
The one big miss for Trump has been the national debt, which he predicted would be cut down, but which has exploded by nearly $3 trillion on his watch. This fiscal year, the budget deficit will top $1 trillion.
Blame for that belongs with both Republicans and Democrats, who’ve been on a spending spree the past three years, while refusing to confront the exploding costs of entitlement programs.
As for the rest of Trump’s economic program, it’s working pretty much as Trump promised. Whatever one thinks about Trump’s tweets or how he conducts himself on the phone, he deserves credit for delivering for the economy.
— Written by John Merline
CORRECTION: The charts originally had the wrong years indicated. They have been updated. Thanks to our readers for catching this!
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Am I missing something? Why do the graphs have the years 2005 – 2009 across the bottom? Are we comparing comparing the end of the Bush Admin to thesthe start of the Obama Admin?
The charts had incorrect years, and have been fixed.
Thanks for the data, keep up the good work
Something you may be interested in
Full Job List: DailyJobFix . com
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This is not the Trump Economy, it is still the Obama Economy,wrested from the stinking ruins of the Great Republican Economic Meltdown, wherein we lost 40% of the value of America. Obama got it back for us, against solid pressure from Moscow Mitch.
But thanks for bringing it up!
If this were really Obama’s economy, then the nominally non-partisan CBO forecasts would have been spot on accurate. But they weren’t.
Good article, but the years shown in graph appear to be 10 years off.
They were, and have been corrected.
You got the years wrong. It says 2007 in the graph.
The charts have been fixed.
Very good analysis I read recently that tax revenue is consistently 17 percent of GDP . So with GDP about 600 billion higher than anticipated the deficit is again a spending issue.
I do take issue with the comments that this would be Obama’s economy. The growth is a product of reduction of regulation,reduction of capital gains and unleashing oil/natural gas production. None of these would have occurred with Mr Obama.
What shall it profit a nation to gain great prosperity and lose both its freedom and its soul?
If the CBO were your financial planner,you would have fired them a long time ago.
Yes, job growth is higher than predicted by the CBO. Of course, the CBO didn’t predict the $300+ billion per year increases in the deficit fueling this higher job growth.
I note that in the first 32 months of President Trump’s presidency, the BLS reports that the US has added 6,027,000 jobs. Not too bad, although below the 2,500,000 per year promised by candidate Trump. Plus this number is probably overstated by about 500,000 jobs, but the BLS won’t restate their charts until next February.
Trump’s 6,027,000 in 32 months compares to 7,112,000 jobs added in the prior 32 months. In other words, despite the exploding deficit, job growth is down substantially.