Who is keeping the economic score?
Over the last two weeks, government statistics mills have released data that show the U.S. unemployment rate continues to fall, the job count continues to grow, and output continues to expand. That is truly great news for U.S. businesses and workers. It is also great news for incumbents running for political office; you can bet they will claimcredit for the robust economy. The question is who really deserves credit for today’s economy.
Last Friday, the U.S. Department of Labor Bureau of Labor Statistics released unemployment rates for July and noted “the unemployment rate edged down by 0.1 percentage point to 3.9 percent, following an increase in June.”
On the campaign trail, President Trump has been blustering about how his policies are responsible for the current low unemployment rates, especially the all-time low unemployment rates for Blacks and for Hispanics. BLS statistics verify his claims. According to the BLS, “among the major worker groups, the unemployment rates for adult men (3.4 percent) and Whites (3.4 percent) declined in July. The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), Blacks (6.6 percent), Asians (3.1 percent), and Hispanics (4.5 percent) showed little or no change over the month.”
Still, the declines in unemployment rates during the Trump Administration pale in comparison to the declines during the Obama Administration. As shown in the chart, during the Obama Administration, the overall U.S. unemployment rate fell by 5.3 percentage points from 10 percent to 4.7 percent. During President Trump’s reign, the overall U.S. unemployment rate has fallen by only 0.9 percentage points from 4.8 percent to 3.9 percent. That puts Obama ahead of Trump by a score of more than 5 to 1. In fairness, it should be noted the decline in the overall unemployment rate during the Obama Administration occurred over seven years, and President Trump has only been in office for 19 months.
The declines in the Black and Hispanic unemployment rates show a similar pattern. During the Obama Administration, the Black unemployment rate fell 8.9 points from 16.8 percent in March 2010 to 7.9 percent in December 2016. Under the Trump Administration, the Black unemployment rate has only fallen 1.2 points. Score: Obama 7.4 Trump 1. Likewise, the Hispanic/Latino unemployment rate fell 7.1 points from 13.0 percent in August 2009 to 5.9percent in December 2016. Under the Trump Administration, the Hispanic/Latino unemployment rate has only fallen 1.4points. Score: Obama 4.2 Trump 1.
On the job front, the tally of jobs rose in July, but the pace of job growth slowed. According to BLS, “total nonfarm payroll employment increased by 157,000 in July, compared with an average monthly gain of 203,000 over the prior 12 months.” The table shows the score for job creation is also in Obama’s favor.
Gross domestic product
Two weeks ago, the U.S. Department of Labor Bureau of Economic Analysis (BEA) released gross domestic product (GDP) data for the second quarter (April — June), which showed U.S. output of goods and services accelerated. According to BEA, “Real gross domestic product increased at an annual rate of 4.1 percent in the second quarter of 2018. In the first quarter, real GDP increased 2.2 percent.” Again, that is great news for U.S. businesses and workers. Still, GDP growth is unlikely to record significantly higher growth than it has over the last eight years because of current labor shortages. Also, in 2017 (President Trump’s first year in office), GDP recorded an annual increase of 2.2 percent, which is the same as the average annual gain recorded during President Obama’s last seven years in office.
Riding the wave
So far, economic statistics show the Trump Administration has been riding the economic wave of the Obama Administration, which is good news for all of us except for our egocentric scorekeepers.