Job growth in November came in 79,000 higher than economists had expected, something that has become a regular occurrence under President Trump, where the economy has repeatedly defied what the “experts” forecast.
Just how big that gap is becomes clear when you look at longer-term forecasts these same experts made.
Take that jobs number. According to the Bureau of Labor Statistics, there are now a total of 152.2 million jobs in the U.S. That’s an increase of 6.8 million since Trump took office. Backers of President Obama will say that during the same 35-month stretch of Obama’s last term in office, the economy created 7.7 million jobs, so Trump is actually doing worse.
That’s misleading, at best. The economy was still coming back from a deep recession, which is when job growth should be robust. (In truth, post-recession job growth under Obama was one of the worst on record since the Great Depression.)
What matters is where economists saw the economy heading when Trump took office.
The Congressional Budget Office provides the answer. At the start of 2017, it released its 10-year economic forecast, which the CBO always boasts is right in the meaty part of the consensus of economists.
When it made its forecast, which assumed that nothing would change in terms of tax, regulatory, spending or any other policies, the CBO figured that the number of jobs created between January 2017 and today would be 2 million.
So Trump is doing better than expected on jobs by 4.8 million.
The CBO also expected that the labor force participation rate (which compares people employed or looking for work to the working-age population) would decline during the first three years of the Trump presidency, dropping from 62.8% down to 62.6%.
Instead, it increased to 63.2%. And this increase came as the baby boom generation started heading into retirement.
How about unemployment? The CBO figured the unemployment rate would be 4.7% by now, and climbing. Instead, it’s now down to 3.5% – the lowest since December 1969.
Then there’s the fact that quarterly GDP growth has exceeded the CBO’s projection in every quarter after Q1 2017.
As we noted in this space, that means the economy is more than half a trillion dollars bigger than it was supposed to be.
So what’s the Democrats’ response to this? They’re claiming that massive tax hikes on companies, investors and savings will boost economic growth.
We are not kidding.
Here’s the New York Times reporting on Elizabeth Warren’s economic plan, which includes roughly $3 trillion in tax hikes (which isn’t nearly enough to pay for all her spending plans):
“The senator from Massachusetts, who is a leading candidate for the Democratic presidential nomination, contends that her plans to tax the rich and spend the revenue to lift the poor and the middle class would accelerate economic growth, not impede it. Other Democratic candidates are making similar claims about their tax-and-spend proposals. Some liberal economists go further and say that simply taxing the rich would help growth no matter what the government did with the money. “
Their argument, of course, is that the government would spend the money more productively than the private sector, so the more of your money they take, the better off you will be.
We hope whichever Democrat wins the nomination runs on this claim, since it will finally clarify where the Democratic party stands today.
— Written by John Merline
Note to Readers: Issues & Insights is a new site launched by the seasoned journalists behind the legendary IBD Editorials page. Our mission is to use our decades of experience to provide timely, fact-based reporting and deeply informed analysis on the news of the day.
We’re doing this on a voluntary basis because we think our approach to commentary is sorely lacking both in today’s mainstream media and on the internet. If you like what you see, feel free to click the Tip Jar over on the right sidebar. And be sure to tell your friends!