Why I Believe The Media’s Talk Of Recession Is Garbage

Breitbart posted an article today about September’s jobs numbers. There is a lot of good news in the report.

The article reports:

Economists had expected the economy to between 150,000 and 180,000 with the median consensus at 163,000, according to Econoday. Unemployment was expected to remain unchanged. Last month’s jobs figure was originally reported at 164,000, now revised down to 159,000, and unemployment was 3.7 percent.

Although the headline number was weaker than expected, wage growth was strong in August. Average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $28.11, or 0.4 percent, following 9-cent gains in both June and July. Over the past 12 months, average hourly earnings have increased by 3.2 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 11 cents to $23.59.

Unemployment among African Americans fell to 5.5 percent, the lowest level on record.

The labor force participation rate edged up to 63.2 percent in August, indicating that the strong labor market has continued to draw Americans into the workforce.

The largest job gains came from professional and business services, which added 37,000.  Census hiring boosted the federal government’s hiring to 28,000 workers. Health care added 24,000 to the total while financial services increased by 15,000.

The article concludes:

Consumer spending and the labor market have been strong. Data released Thursday showed worker compensation rising strongly and well-above inflation. Rising labor costs can promote capital investment by businesses seeking to make workers more productive.
With unemployment near 50-year lows, job growth has slowed and many businesses say they are having trouble hiring. Employment growth has averaged 158,000 per month thus far this year, compared with an average monthly gain of 223,000 in 2018.

This is the chart showing the Workforce Participation Rate since 2009 (from the Bureau of Labor Statistics website):

We are not yet up to 2009 levels, but we are moving in the right direction. The economic indicators are positive. Hopefully the American public will be able to see past the media’s efforts to create a recession.

The Trump Economy Is Doing Very Well

CNBC posted an article yesterday about the economy under President Trump.

The article reports:

The total number of workers hired rose to a new high in April, according to Labor Department data released Monday. But despite this, the amount of available jobs still vastly outnumbers unemployed workers.

Hirings increased to 5.9 million for the month, a gain of 240,000 from March, the Job Openings and Labor Turnover Survey (JOLTS) indicated. The hiring rate rose to 3.9%, an increase of one-tenth of a percentage point. The total hirings was the most recorded in the data series’ history going back to December 2000.

On the openings front, the gap between vacancies and available workers continued to be huge.

The article explains:

“In sum, the labor market remains strong and poised for continued solid job growth,” Ward McCarthy, chief financial U.S. economist at Jefferies, said in a note. “Despite the 21.4 [million] private sector jobs that have been generated to-date this cycle, the private business sector continues to generate a very strong demand for labor that is evidenced by the very large number of job openings that business wants to fill. The biggest threat to job growth is available supply, not demand for labor.”

Separations increased by 70,000 to 5.58 million, a rate of 3.7%, which was unchanged from March.

The JOLTS data lags other employment indicators by a month but is nonetheless watched closely by the White House and the Federal Reserve as an indicator of labor market slack. A large number of available workers compared with job openings would indicate a tight market in which wages should be rising.

The current economy has created wage increases and job opportunities for the middle class, which languished under President Obama. Unemployment among minorities is lower than it has ever been and wages are increasing for minorities. This is a success story the media is working very hard to ignore.

The Economy Is Humming Along

CNBC is reporting today that the economic news for April is very good.

The article reports:

The U.S. jobs machine kept humming along in April, adding a robust 263,000 new hires while the unemployment rate fell to 3.6%, the lowest in a generation, the Labor Department reported Friday.

Nonfarm payroll growth easily beat Wall Street expectations of 190,000 and a 3.8% jobless rate.

Average hourly earnings growth held at 3.2% over the past year, a notch below Dow Jones estimates of 3.3%. The monthly gain was 0.2%, below the expected 0.3% increase, bringing the average to $27.77. The average work week also dropped 0.1 hours to 34.4 hours.

Unemployment was last this low in December 1969 when it hit 3.5%. At a time when many economists see a tight labor market, big job growth continues as the economic expansion is just a few months away from being the longest in history.

The growth in the economy is the result of economic policies put in place by President Trump–tax cuts, revised trade deals, cuts to regulations, and generally making the economy more welcoming to companies who want to do business in America.

The article concludes:

GDP increased 3.2% during the first quarter, far exceeding expectations, while productivity during the quarter jumped 3.6% for its best gain in five years. Pending home sales rose 3.8% in March, providing some hope in the real estate market so long as rates are held in check.

Earlier this week, the Federal Reserve held the line on its benchmark interest rate, characterizing economic growth as solid even as inflation remains tame. The central bank watches metrics like the nonfarm payrolls report closely for clues both on job creation and wage pressures.

Fed Chairman Jerome Powell said current indications point to a prolonged period of holding pat on increases or decreases in rates. President Donald Trump has said he wants the Fed to cut rates by a full percentage point.

The economy plays a big role in deciding elections. None of the policies espoused by the current group of Democrat Presidential candidates for 2020 will continue this economic growth.

The Power Of The Media Illustrated

This is the current polling from RealClearPolitics:

This is some recent economic news reported by The Washington Times on January 9:

Given the dazzling December economic data, it’s no wonder the press gave it short shrift. According to the U.S. Bureau of Labor Statistics, the economy added a whopping 312,000 jobs, far more than the expected 176,000. After revisions, job gains have averaged an impressive 254,000 per month over the past three months. Job growth in 2018 (an average of 220,000 per month) passed that of both 2016 (195,000) and 2017 (182,000). Payrolls increased by 2.6 million in 2018, the highest since 2015.

The sunny jobs picture encouraged 419,000 new workers to enter the workforce and sent the labor force participation rate up to 63.1 percent. Unemployment rates among blacks, Latinos and women are at or near historic lows.

Job growth has also meant significant wage growth. Wages are up a stunning 3.2 percent from last year and .4 percent from November. December was the third straight month that the yearlong growth in nominal average hourly earnings was above 3 percent in nearly a decade; the last time we saw that trend was April 2009. Wages are also being given an assist by inflation being kept in check.

The article at The Washington Times concludes:

His (President Trump’s) astounding economic track record is their worst nightmare. It puts the lie to the nonsense Mr. Obama, the Democrats and the media have been shoveling for years: That anemic economic growth, high unemployment, the collapse of manufacturing and grotesque trade imbalances were the “new normal.”

It also pointedly demonstrates that the statist vision — radical wealth redistribution, socialized medicine, green energy chimeras, social justice enforcement, limits on free speech, private property and gun ownership, and the rule of the leftist mob — creates only tyranny, poverty, injustice and servitude. (Note the deflection: These are things the left claims to want to eradicate.)

Mr. Trump and his economic thunderbolt are exposing the left and its policies as irredeemably bankrupt, economically and morally. And that is perhaps the biggest reason why they must try to destroy him.

A lot of this economic news has not been reported. However, people do notice when there are more jobs available and there is more money in their paycheck. President Trump’s approval numbers are finally in positive numbers. The economy is booming. What would be the basis for most Americans believing America is headed in the wrong direction? Might it be the constant negative reporting from the media? Can you imaging what President Trump’s approval rating would be if the media were actually balanced? Just remember–the people vote. The media represents only a small percentage of votes.

This Is How You Actually Help Middle-Class Families

On Friday, Investor’s Business Daily posted an editorial with the title, “Trump Delivers For Workers … After Years Of Empty Obama Promises.” The editorial cites the latest jobs report and explains how that excellent report is the result of President Trump’s economic policies. The first thing to remember here is that President Trump is a businessman–not a politician (although he has a very fast learning curve). His approach to government seems to be very similar to that of a businessman–what is the most efficient way to solve a problem? There are those in Washington who do not welcome this approach.

The editorial reminds us:

The 304,000 gain in jobs reported by the Labor Department was nearly twice the consensus estimate. And it comes after December’s expectation-busting gains.

There’s more. The jobs picture is so strong right now that it’s pulling people in who’ve been sitting on the sidelines.

In fact, for the first time in more than 20 years, the number of people who are out of the labor force — those without jobs and not looking — shrank by 647,000 over the past 12 months. So many people are returning to the labor force that the official unemployment rate is going up, even as the job market booms.

This comes, mind you, at a time when baby boomers are retiring en masse. Under Obama, in contrast, the number of labor force dropouts exploded by 14.4 million.

The latest numbers also underscore a point we’ve been making in this space for months — that all the talk of a tight labor market overlooked the vast pool of idle workers during the Obama years.

The editorial concludes:

Other evidence of this turnaround came earlier in the week, when the Labor Dept reported that private sector wages and salaries climbed 3% last year — the biggest annual increase in a decade. Under Obama, private sector wage gains averaged just 2%.

Why Now?

So why now, this late in the game?

The answer is simple. At least to those not blinded by partisanship or economic ideology.

For eight years, Obama kept promising “bottom-up growth,” while telling the country that tax cuts and deregulation would only benefit the rich. But his policies — Dodd-Frank, ObamaCare, higher taxes, a regulatory tsunami — produced economic stagnation. As it always does, that stagnation hurt the working class most.

Trump went in the opposite direction. His pro-growth tax cuts, deregulatory campaign and pro-energy policies fueled huge increases in economic optimism and turbocharged the economy. And now we’re seeing real job growth and strong wage gains for the first time in more than a decade.

You tell us which approach is proving more worker friendly.

Wouldn’t it be nice if Republicans and Democrats could work together to insure the continuation of this economic growth?

The Workforce Participation Rate

Yesterday CNS News posted an article about the January Workforce Participation Rate. This is the number of people in America either working or looking for jobs. When President Obama took office in January 2009, the Workforce Participation Rate was 65.7. That number dropped to a low of 62.4 in September 2015 and began slowly climbing, reaching a high of 62.9 in September 2016. The number hovered around there for a while until finally reaching 63.2 in January 2019.

Here is the chart from the Bureau of Labor Statistics:

The article at CNS News reports:

The Labor Department’s Bureau of Labor Statistics said the economy added 304,000 jobs last month, higher than analysts were expecting.

The number of employed Americans, 156,694,000, was slightly below last month’s record (156,945,000), and the unemployment rate increased a tenth of a point to 4.0 percent.

But the labor force participation rate increased a tenth of a point to 63.2 percent — the highest it’s been on President Trump’s watch.

The CNS News article included an excerpt from the Congressional Budget Report released this week:

According to CBO:

Employment: Nonfarm payroll employment is projected to grow by an average of 148,000 jobs per month in 2019, a decline from 213,000 jobs/month in 2018 but “still a healthy pace of job growth at this stage of the business cycle.”

Unemployment rate: The unemployment rate, now at its lowest point since the 1960s, is projected to fall from 3.8 percent in the fourth quarter of 2018 to 3.5 percent by the end of 2019. The anticipated decline in the unemployment rate reflects a continued increase in the demand for labor, which will reduce the number of unemployed workers in the labor force this year.

CBO said the demand for labor and the resulting upward pressure on compensation also encourages people to remain in the labor force or rejoin it, making the labor force larger and thus moderating the decline in the unemployment rate.

Labor force participation: The labor force participation rate, which has hovered around 62.8 percent since 2014, is expected to remain close to that rate during the next two years.

CBO explained that the stability of the labor force participation rate in recent years reflects the balancing of two opposing forces: sustained economic growth, which continues to encourage additional workers to enter the labor force and currently employed workers to stay on the job; and long-run shifts in demographics (particularly the aging of the population).

Labor compensation. After several years of prolonged weakness, wage growth accelerated notably in 2018, CBO noted. Over the next few years, labor compensation is expected to rise further as employment remains at elevated levels and firms must compete for a relatively small pool of unemployed or underemployed workers.

In CBO’s projections, annual growth of the employment cost index for wages and salaries of workers in private industry averages 3.5 percent between 2019 and 2023, slightly more rapid than its 3.3 percent pace in 2018 and considerably more rapid than the 2.0 percent average from 2009 to 2017.

President Trump’s economic policies are working. If he is allowed to continue those policies with a Democrat House of Representatives, he will be re-elected in 2020, so prepare to see the House of Representatives attempt to roll back many of those policies.

Lost In The Partisan Hype

Guy Benson posted an article today at Townhall about the American economy under President Trump.

The article quotes a Wall Street Journal article listing economic milestones:

The number of Americans claiming new unemployment benefits has never been so low for so long.  Initial jobless claims, a proxy for layoffs across the U.S., decreased by 9,000 to a seasonally adjusted 233,000 in the week ended April 7, the Labor Department said Thursday. This means claims have now held below 300,000 for 162 consecutive weeks, cementing the longest streak for weekly records dating back to 1967...The current streak eclipsed the previous longest stretch that ended in April 1970. Taking into account the size of the labor force, claims today compared to the late 1960s and early 1970s are much lower…The consistently low claims levels point to labor market health because they mean relatively few Americans are losing their jobs and applying for benefits to tide them over until they can find new employment. After several years of consistent job growth, firms are reluctant to let employees go in a tightening labor market in which many available workers are quickly snapped up.

Wow.

Further good news:

Trump’s speech came amid surging optimism among American manufacturers thanks to the after-effects of the GOP’s recently-implemented tax reform law. More than 93% of manufacturers have a positive outlook on their company’s prospects in the U.S. economy – the second-highest level ever recorded by the National Association of Manufacturers –  its most recent quarterly survey revealed. Meanwhile, optimism among small manufacturers was at its highest level ever recorded throughout the survey’s 20 year history; 94.5% of companies reported that they were positive about their future. Wage growth among those manufacturers surveyed also rose at the fastest pace in 17 years…The survey showed that manufacturers expected full-time employment to increase by 2.9% on average over the next year, an all-time high by the survey’s standards. Companies also said capital investments are likely to rise by 3.9% over the next 12 months, while inventories are expected to rise by 1.7%.

The two main causes for the economic boom are cutting the regulations that make it difficult for businesses to grow and changing the tax codes so that Americans get to keep more of what they earn. Small business is one of the main engines of job growth in America, and changing the way small businesses pay taxes has a very positive impact on job growth. One other factor in the economic boom is the move toward American energy independence. Low energy costs and low taxes are two things that attract foreign businesses. Because America now has both of these assets, we are more attractive as a place for foreign business to relocate. We are more competitive in the global marketplace because of the policies of President Trump. That is a really good thing.

The Trump Economy

CNBC is reporting today that more private-sector jobs were created in October than economists expected.

The article reports:

The ADP National Employment showed private-sector businesses added 235,000 jobs in the month. ADP was expected to show private employers added 200,000 jobs in October, up from 135,000 in September.

Goods-producing companies benefited strongly with 85,000 new jobs, 62,000 of which came from construction. Manufacturing also saw 22,000 positions added.

…Overall, the service sector accounted for the bulk of the job creation, adding 150,000 jobs. Professional and business services added the most positions, up 109,000. Job losses were seen in the trade, transportation, and information sectors, as well as education.

“The job market rebounded strongly from the hit it took from Hurricanes Harvey and Irma,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement. “Resurgence in construction jobs shows the rebuilding is already in full swing. Looking through the hurricane-created volatility, job growth is robust.”

Leisure and hospitality contributed 45,000 to the total while health care and social assistance grew by 44,000.

In terms of business size, job gains were spread evenly, with companies that have more than 500 employees hiring 90,000 while those with fewer than 50 added 79,000.

Part of this growth is the result of deregulation, and part of this growth is in anticipation of tax cuts that will be favorable to the middle class and to business growth. It will be interesting to see how the increase in the number of people re-entering the job market looking for jobs impacts the unemployment numbers that will come out this week.

A Law Went Quietly Into Effect January 1

The American Spectator posted an article today about a law that quietly went into effect on January 1, 2016.

The article reports:

One of the worst of Obamacare’s ill-conceived provisions went quietly into effect on January 1. The employer mandate, previously inflicted only on businesses with 100 or more employees, will now be imposed on those with as few as 50. This mandate will prevent countless small employers from hiring workers they would otherwise have hired and incentivize many others to replace full-time employees with part-timers. It is such an obvious job killer that the Obama administration delayed enforcement until after the 2014 midterms, the liberal Urban Institute has called for its repeal, and it has even been obliquely criticized by Hillary Clinton.

The employer mandate requires all businesses with 50 or more full-time employees to provide health coverage to at least 95 percent of these employees as well as any dependents they may have under age 26 — or pay crippling fines. But not all small employers can afford to offer insurance. Those which lack the resources to do so will avoid the mandate by assuring that the number of full-time workers they employ remains below 50. And, because Obamacare has arbitrarily redefined “full-time” to mean 30 or more hours per week, the employer mandate effectively caps both the number of workers many businesses can hire and how many hours they will work.

As someone who spent most of my working career working for small businesses, I can state from personal experience that small companies are very aware of government regulations and how to avoid them. One way to get around this rule is to keep the size of a company under 50 employees–this impacts unemployment–companies that might want to hire additional people will not hire them because they want to avoid coming under the employer mandate. The other way to get around this is to use contract workers that are self-employed and do not receive any company benefits, but there are very strict rules governing contract workers, and they are not practical for every business. Either way, the employer mandate is going to have a chilling impact on hiring. The labor force participation rate has been dropping consistently during the Obama Administration. The employer mandate will cause it to drop further. Bringing companies of more than 50 employees under the employer mandate will not be a good thing for the economy.

The article further reports:

Ironically, considering that the question came from an obvious audience plant, Mrs. Clinton got it wrong on the Family and Medical Leave Act. FMLA eligibility isn’t based on full time or part time status. And she also seems unaware that an employee can work fewer than 40 hours per week and still be considered full-time in the brave new world of Obamacare. But the most telling part of her answer was her use of the word “believe.” Playing off the questioner’s placement of the FMLA issue in the realm of “discrimination,” she implied that employers who are simply following federal law are in reality just crooks who want to deny benefits to their workers.

She was clearly waiting for that question and the opportunity to suggest that, as President, she would work to fix the “unfortunate incentives” created by Obamacare. However, considering that Hillarycare included an employer mandate, and that it was an integral part of the health care reform plan she offered the last time she ran for President, it’s extremely unlikely that she would follow the eminently sensible policy recommended by the authors of the Urban Institute report: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.”

Is there anyone in the Obama Administration that understands basic economics and business?

The Jobs Report In Wisconsin

Right now, Scott Walker is the top Republican fund raiser in the Presidential primary. He is also a favorite of the conservatives, which makes him a prime target of attack for the Clinton machine and anyone out there on the liberal side of the spectrum that has designs on the presidency. Get ready for the attacks–here are some of the facts.

Today’s Wall Street Journal posted an article about his record on employment in Wisconsin. Scott Walker took office in 2011. He faced a recall almost immediately, which he won. Despite the opposition, he continued his policies of cutting spending and lowering taxes.

The article reports the results:

Yet Wisconsin’s employment-population ratio has jumped 2.5%—significantly more than the national improvement rate. Wisconsin is also gaining ground against other states. In February 2011 Wisconsin ranked 12th in employment-population ratio. It now ranks ninth.

The U.S. employment-population ratio has grown 1.5% since Mr. Walker took charge.

The article further explains:

Some will rightly point out that the unemployment rate fails to account for people who can’t find a job and stop searching. And so a low unemployment rate is more meaningful if it is accompanied by high participation in the labor force. Since February 2011, the national labor-force participation rate has dropped to 62.7%, from 64.2%. Wisconsin’s rate, much healthier than the national average, has also declined but by significantly less, to 68.4% from 69.1%.

Wisconsin’s current 68.4% labor-force participation rate is particularly noteworthy because it represents an uptick over the past year from a low of 68.1%. Nationally, the average labor-force participation rate has declined to lows last seen during the Carter administration.

Given that Wisconsin’s unemployment has dropped to 4.6% from 5.6% in the past year, the state is in the enviable position of having lowered unemployment while increasing labor-force participation. Not surprisingly, this has helped Wisconsin move up to eighth place in state labor-force participation, from 12th in 2011.

Keep these figures in mind as you hear the attacks on Scott Walker that will be coming from the political left. I have not yet made up my mind as to whom I am supporting in the Republican presidential primary, but these are impressive statistics.

Who Is Working And Who Is Not

The National Review Online posted an article today about job growth since the recession began in December 2007.

The article reports:

From November 2007 through November 2014, the number of employed native-born Americans has decreased more than 1.45 million, while the number of employed immigrants has risen by more than 2 million (as the immigrant population grew rapidly, too), according to data compiled by the Department of Labor’s Bureau of Labor Statistics.

“Native employment has still not returned to pre-recession levels, while immigrant employment already exceeds pre-recession levels,” the report says. “Furthermore, even with recent job growth, the number of natives not in the labor force (neither working nor looking for work) continues to increase.”

This might be something to consider when debating President Obama’s amnesty memo. I suspect there are two main reasons for this statistic–first of all immigrants (legal or illegal) may be willing to work for lower wages, and secondly, many immigrants may have a stronger work ethic than many Americans. Either way, this does not bode well for America’s future.

 

An Obvious Example Of Economic Growth

The Washington Examiner posted an article today about job growth in Texas since the recession began in December 2007.

These two charts tell the story:

So what is the secret? The article reports:

For starters, Texas does not collect an individual income tax or a corporate income tax. It does collect a gross receipts tax. Still, the Tax Foundation’s 2015 State Business Tax Climate Index says Texas has the tenth best business tax climate in the U.S.

Texas has one of the highest sales taxes in the nation to make up for lost income tax revenue. The combined state and average local sales tax rate of 8.15 percent is 11th highest in the nation. However, sales taxes are more efficient than income taxes, since they don’t punish work.

Texas is also a right-to-work state, which studies have shown is better for the economy. Texas is the freest labor market in the country, according to the Mercatus Center. Their labor market freedom rankings include right-to-work status, in addition to minimum wage laws and workers compensation regulations, among other factors.

It seems to me that Congress and the Obama Administration could learn a lot about economics from Texas. Hopefully the new Republican Congress will copy some of the things that have worked in Texas.