Sunday, August 6, 2017

The Jobs Report: Proof of Trump Making America Great Again - Howard J. Warner

by Howard J. Warner

The July jobs report includes 209,000 new jobs. This brings the total to over 1 million since January. But the new cover of Newsweek carries a caricature of Trump in a lounger with the title "Lazy Boy."

Since the election of Donald Trump, most economic news has been positive despite the lack of media coverage. Prior to November 2016, some financial reporters predicted losses for the stock market and our national economy should Hillary Clinton lose the election. Yet, since the 2016 election, the Dow is up 20.5% and 12% since January, the NASDAQ is up 21% and 18% since January, and the S&P is up 16% and 12% since January. This demonstrates the limitations of following the "experts" who do not disclose their political prejudices.

The July jobs report includes 209,000 new jobs. This brings the total to over 1 million since January. But the new cover of Newsweek carries a caricature of Trump in a lounger with the title "Lazy Boy." It is insulting, inaccurate (as he puts in hours most people half his age could not manage), and one-sided.

A look at the economic parameters gives one a sense that the doldrums may be ending. During the Obama years, we averaged less than 2% growth and were told that this was the new normal. To the forgotten Americans, this is unacceptable. Under President G.W. Bush, we saw the end of real income growth nationally, which imperils support for our republic. The health of our economy provides a sense of the national mood. Hence, the forgotten supported the election of Donald Trump, who promised to change the situation for dislocated workers and unemployed citizens, long dismissed by their political leaders.

A perusal of the numbers is quite encouraging: the national unemployment rate is now 4.3%, a 16-year low. Now 7 million are unemployed, which is a shrinking number. The labor participation rate has risen to 62.9%. There are still 5.3 million people employed part-time due to economic reasons. Some 1.8 million people are considered long-term unemployed and constitute 25.9% of the total unemployed. But the number of discouraged workers has declined to 536,000. Though there was improvement of the national economy during the Obama years, this acceleration of good news must upset Democrats and liberals who wish to unseat Trump.

The lack of growth in national income is hard to explain, according to the financial media. Economists have claimed for years that full employment is 4% or so. Under their thinking, the pressures for necessary workers should have an upward effect upon incomes. Only among the lowest wage-earners is income rising. This may provide some new voters for Trump's re-election.

Reporters have missed possible reasons for this situation. Employers calculate total compensation packages for employees. This includes benefits such as Social Security taxes, Medicare taxes, unemployment taxes, vacation time, sick leave, health insurance costs, and miscellaneous expenses. The exploding cost of health care insurance premiums due to Obamacare mandates and fewer insurance providers has cut into the available dollars to give raises. The Trump administration must emphasize this as a way to get Republican senators to move on reform of the Affordable Care Act.

Trump's visit to West Virginia was met with enthusiasm. Governor Jim Justice announced his switch to the Republican Party at the event. This is possible despite the overwhelming number of registered Democrats in the state. Trump won the state by over 40% in 2016. Some see pressure on Senator Joe Manchin to change parties. The reduction of federal regulations affecting the coal and logging industries has resulted in 18,000 new jobs in W.V. Though polls miss this enthusiasm, and over-represent Democrats, Trump recognizes this and sought to shore up his base.

Few presidents have faced such opposition during the first six months in office. Special Counsel Robert Mueller has assembled sixteen seasoned lawyers (eight of whom are Democratic donors) for his effort to find a crime to investigate, most likely financial. This might ruin most days for the normal citizen. A grand jury inquiry in Washington, D.C. is likely to be antagonistic to Trump, where he garnered only 4% of the vote. This inquiry threatens Trump's ability to manage our country. Trump faces an organized resistance by Democrats, media, and liberal elites. 

Trump attempts to undo much of the Obama legacy, much done under executive powers. Many entrenched politicos and bureaucrats are threatened by this effort. Undoing many regulations imposed during the past eight years has loosened investment within the private sector, but it reduces the privileges the Washington elite accrue. The Washington swamp includes members of the president's party, the Republicans, who have stalled health care reform prior to their summer recess.

The president continues his work despite this undaunting opposition. He has assembled an able Cabinet. A.G. Jeff Sessions has begun a stronger effort with DNI Dan Coats to catch illegal leakers, who damage the administration, personal privacy, and national security. Loosening of unmasking rules by DNI Clapper during the Obama years has political consequences that must be investigated and prosecuted if appropriate. Reducing the damaging leaks may allow more political support for Trump's economic reforms.

The president does not create jobs, since our nation is not a centrally managed economy. Our political leaders provide the environment for creative entrepreneurs to grow their businesses and hire more people. During the past decades, however, the trend toward greater federal control has reduced private domestic investment. Tax policy and regulatory policy are underlying conditions for businesses. Over the years of increasing taxes and regulations, many businesses have moved their funds overseas and limited domestic growth. Tax reform must encourage this repositioning by reducing the penalty of a 35% corporate tax, among the highest internationally. Health care reform could provide up to $1 trillion for greater tax reform.

At slightly over six months, this is not yet "the Trump economy." The stock market has risen despite the lack of congressional movement on health care and tax reform. Most of this $4-trillion rise is attributable to strong corporate earnings. What might happen if the Republican Congress does its promised legislative work on those issues? 

The change of chief of staff at the White House, where General Kelly establishes greater order, may help get these legislative victories. Trump is among the least orderly chief executives in history. If he can rein in his desire to multitask, he might accomplish his goals.

Trump is finding that running the government is more challenging than his corporation. The swamp is loaded with alligators. Trump's success depends upon not his personality, but his ability to positively affect our lives. His success is our good fortune – literally.

Howard J. Warner


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