Trump's inherited 'mess' hard to find in economic data

Trump's inherited 'mess' hard to find in economic data
Trump's inherited 'mess' hard to find in economic data

No one would dispute the fact that, nearly a decade after the worst economic downturn since the 1930s, millions of American households are still suffering the financial impact.

And the monthly jobs numbers and other official indicators mask the much more complex impact of today's economic crosswinds on the financial well-being of American families, many of whom are still recovering from the trillions of dollars of household wealth wiped out by the loss of foreclosed homes, investment savings and lost paychecks after the wave of U.S. mortgage lending fraud that sparked the 2008 global financial collapse.

But, while painfully slow for many voters, the job market momentum of the last few years has also begun pushing wages higher, after a long, bleak stretch for American households. Those meager gains in workers' paychecks for the last decade were a major theme of last year's campaign.

Now, the continued demand for workers to fill new positions is finally pushing wages higher, says Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

"The trend in employment growth remains more than strong enough to keep the unemployment rate trending down and adding to upward pressure on wage gains," he said in a recent note to clients.

Trump's dystopian description of the economy — echoing his stark Inaugural address decrying "American carnage" — may be intended to set a low bar from which to measure the success of his presidency.

Trump would not be the first president (or governor, or mayor) to blame a predecessor for economic weakness and take credit for any future improvements.

President Barack Obama, for example, frequently points the the wave of job losses that greeted him when he took office in 2009. George W. Bush inherited a recession in 2001 after the collapse of the Clinton-era Internet bubble.

And much of the groundwork for the 1980s national prosperity of the Reagan administration was laid by the politically painful policy of double-digit, inflation-killing interest rates engineered by fiercely independent Fed Chairman Paul Volcker during the Carter administration.

On the campaign trail, Trump dismissed official unemployment numbers like those as a "hoax."

"Don't believe these phony [employment] numbers," Trump told his supporters. "The number is probably 28, 29, as high as 35 [percent]. In fact, I even heard recently 42 percent."

According to the broadest measure, known as the U-6, which includes so-called discouraged workers, the jobless rate is much higher — 9.4 percent as of last month. That measure has been much higher than the so-called headline rate since the government began the current six-tier data set in 1995.

By contrast, the narrowest jobless measure doesn't count someone as "unemployed" until they've been out of work for more than 15 weeks. That measure (U-1) was 1.9 percent in January.

Despite the variance in the different measures, these jobless rates have fallen close to levels not seen since the last days of the go-go '90s internet boom.

Even last month's one-tenth of a percent rise in the jobless rate was, in some ways, another sign of improvement. The increase came because the labor force participation rate — the share of the population working or looking for a job — rose by two-tenths of a percent as more than 500,000 people entered the workforce.

At least some of those were people who had given up looking for a job but are now resuming a job hunt because their prospects have improved.

Beyond the monthly unemployment rate data, there are other job market statistics that are hard to square with Trump's dystopian take on the prospects for American workers.

For example, the pace of weekly unemployment claims, a benchmark for the rate of layoffs, is at the lowest level since the 1973 oil embargo.

A separate, less well-known measure of hiring, the Job Openings and Labor Turnover Survey, known as JOLTS, offers further evidence of that the economy is creating new jobs at a healthy clip.

CNBC

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