Economy Weekly: Week of February 3, 2020
QUOTE OF THE WEEK: “…Promises made, promises broken. During his presidency, Mr. Trump has announced ambitious plans with abandon: growth of ‘4, 5, 6 percent,’ a tax cut that would raise workers’ wages significantly and new trade policies that would again make the United States a manufacturing powerhouse. None of those things has happened. To get his tax cut passed, for example, his Council of Economic Advisers claimed it would add $4,000 a year to the average American’s paycheck. Instead, the average household’s tax cut was a mere $930, and as noted, real wages have barely budged. His promised investment boom fizzled quickly; capital expenditures by businesses have been declining in real terms.” - Steven Rattner [The New York Times, 2/05/20]
STAT OF THE WEEK: Revisions to the previous jobs report change the overall picture. “The revisions showed that employers added 514,000 fewer jobs in 2018 and early 2019 than initially reported, mostly consistent with preliminary figures released last summer. That’s the equivalent of wiping out more than two months of job growth at recent rates, although hiring caught up a bit later in 2019 — by the end of the year, the gap between the original and revised figures had narrowed to about 400,000 jobs.” [The New York Times, 2/07/20]
ECONOMIC NEWS YOU MAY HAVE MISSED
- The unemployment rate increased slightly in January. “The unemployment rate ticked up in January to 3.6 percent, but the rise doesn’t suggest any trouble in the job market. In fact, the opposite: The rate increased because more people joined the labor force to look for work.” [The New York Times, 02/07/20]
- The President’s economic performance is nowhere near what he claims. “In taking credit for a financial upswing, Trump is engaging in a hallowed and bipartisan American political tradition—and a blustery one. The White House has far less control over the economy than generally assumed. And Trump’s signature economic legislation, the 2017 Tax Cuts and Jobs Act (TCJA), has not provided anything like the economic ‘rocket fuel’ the Republican White House promised, particularly not for blue-collar workers in the heartland…Nor has Trump managed to deliver any kind of blue-collar economic miracle, contrary to his arguing last night that 'we are restoring our nation’s manufacturing might.'” [The Atlantic, 2/05/20]
- Trump’s economic promises fall flat. “Where Trump goes too far is in touting this economy as the ‘best ever’ and trying to portray the end of the Obama era as dire and himself as the hero flying in on the Trump jet to save the day. He has taken steps such as tax cuts to keep the economy growing and increase competitiveness, but he’s also inflicted pain. His tariffs have hurt U.S. manufacturing and agriculture. And his tax cuts and increased government spending have added substantially to the national debt…Consider economic growth. Last year, the U.S. economy grew 2.3 percent — about average for this expansion and well below the 4 percent level Trump promised. So far in Trump’s term, growth is averaging 2.5 percent. That’s higher than under Presidents Barack Obama or George W. Bush, but much slower than the averages for Clinton and Ronald Reagan...” [Washington Post, 2/05/20]
- After a decade of economic expansion, Black workers are finally seeing an increase in wages. “A New York Times analysis of government data found that wage growth for black workers has accelerated recently after lagging for much of the decade-long economic expansion. But when Mr. Mitchell looks around his relatively low-income and heavily black neighborhood, he worries that the rising tide of a strong economy has not been equally good for everyone in his community. And when it comes to his own labor market gains, he’s working hard to make sure they do not prove fleeting.” [New York Times, 02/07/20]
