Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.
Image
For
the second consecutive Friday, the Trump administration had an
opportunity to point to fresh data that supposedly demonstrates the
strong boost the president’s policies have given to the nation’s
economy. Last week, news that the gross domestic product expanded at a
4.1 percent rate in the second quarter occasioned a presidential appearance on the south lawn of the White House.
Friday’s announcement that 157,000 new jobs were added in July was
marked more modestly, with a statement from the White House.
Yes,
the economy is continuing to expand nicely, which all Americans should
celebrate. But no, there’s nothing remarkable in the overall results
since Mr. Trump took office. Most importantly, there is little evidence
that the president’s policies have meaningfully improved the fortunes of
those “forgotten” Americans who elected him.
Let’s
start with the jobs numbers. While the latest figures are certainly
positive, the United States has been adding jobs since well before Mr.
Trump took office. And the rate of job growth during Mr. Trump’s first
19 months in office (194,000 jobs per month) is slightly less than the
rate at which jobs were added during Mr. Obama’s final 19 months
(205,000 per month). So the good news on jobs is the same good news
Americans have been hearing for the last three years.
Steady Job Growth Continues
Monthly totals, in thousands.
300
Obama average:
205,000
Trump average:
194,000
200
100
0
2016
2017
2018
JULY
With
each month’s jobs figures, the Labor Department also releases the
latest wage data, which often gets short shrift in the news accounts.
That’s unfortunate because for a majority of the roughly 150 million
Americans who have jobs, the income picture is harsh and not improving.
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After
adjusting for inflation, wages have barely increased during the Trump
presidency. When July’s Consumer Price Index is reported next week, it
is likely to show that whatever modest increase workers are getting in
their wages continues to be eaten up by rising prices.
Over
the first 18 months since Mr. Trump took office, real earnings, which
reflect earnings after accounting for inflation, rose at an annual rate
of just 0.3 percent.
Accounting for Inflation, Wage Improvement Is Slight
Rising
prices have been eating up most of the modest increases in workers’
pay. Real average hourly earnings, year over year percent change.
+4%
+2
Obama average: 0.8%
Trump
average:
0.3%
0
–2
2010
2011
2012
2013
2014
2015
2016
2017
2018
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Then
there’s the matter of the seemingly stellar second-quarter increase in
gross domestic product of 4.1 percent. That also requires context. For
one thing, quarterly numbers can be volatile, and the most recent figure
includes an unusual number of special factors.
Notably,
there are the tax reductions and spending increases concocted by the
Trump administration and Congress, which added an estimated 0.8 percent
to quarterly G.D.P. growth while more than doubling next year’s federal deficit to nearly $1 trillion.
Another
one-time event propping up growth is the rush by farmers to export more
soybeans, particularly to China, before July 6, the date when tariffs
on soybeans went into effect. That accounted for about 0.6 percent of
the growth in the second quarter, according to Pantheon Macroeconomics, a
research firm.
Without these
extraordinary interventions, the underlying rate of economic expansion
in the second quarter of this year was about 2.7 percent, according to
calculations by the Committee for a Responsible Federal Budget, a fiscal
policy research and advocacy group.
Moreover, that 4.1 percent number isn’t heroic. During the Obama presidency, the economy produced four quarters of growth that were higher.
And the consensus among private and government forecasters is that the
G.D.P. growth rate is likely to ebb quickly, once tariffs are actually
in effect and the tax cut gains are all realized. Goldman Sachs, for
example, forecasts that the annualized growth rate will fall to 3.3
percent in the third quarter and then taper down to 1.5 percent by the
end of 2019.
Beyond all the facts and
figures, let’s not forget that the Trump administration’s policies have
done little for the average worker. Mr. Trump’s tax cut delivered 84
percent of its benefits to business and to individuals with incomes
above $75,000 a year. A typical middle-income worker will get a $930 reduction in his taxes this year, half of which will be consumed by higher gasoline prices.
That’s
the key lesson from all these numbers: Whatever claims Mr. Trump may
make about the economy as the midterm elections approach, most Americans
have yet to experience any improvement in their economic well-being.
And there’s little sign of that sorry situation changing. In fact, it
could even get worse.
Steven
Rattner, who served as counselor to the Treasury secretary in the Obama
administration, is a Wall Street executive and a contributing opinion
writer. For latest updates and posts, please visit stevenrattner.com and follow me on Twitter (@SteveRattner) and Facebook.
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