President Trump, who has been taking credit for the economy he inherited from his predecessor, got a reminder today of the danger of taking credit for economic conditions beyond one’s control. If you want to claim credit for a stock market boom or rosy job reports, you better be able to shoulder responsibility for stock market retrenchment and sour job numbers.
Trump got some disappointing job news today. The Post reports:
The momentum in the U.S. labor market flagged in March, new government data showed Friday, with the private sector and the government adding only 98,000 jobs, the lowest gain in nearly a decade, as winter storms weighed on economic activity.
Scott Anderson, chief economist of Bank of the West, called the report a “bit of a disappointment,” but added “I think it’s more of a blip than a start of a new trend.” Anderson said that winter storms could have subtracted as many as 60,000 jobs from March payrolls, especially in weather-sensitive industries like construction, retail and leisure and hospitality.
Other data released Friday morning showed a stronger picture of the labor market, suggesting the rough month for job growth may be more of a temporary fluctuation than a sign of a deeper economic malaise.
On the positive side, the unemployment rate dropped to 4.5 percent with more people returning to the job market. In addition, an “alternative measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions, was 8.9% in March, down from 9.2% from the prior month and the lowest since December 2007.”
Trump is no more responsible for this jobs report than he was for the terrific numbers last month. The problem for him is twofold. First, he is not delivering on sky-high promises (“some analysts caution that investors may already be losing patience with the White House’s ambitious economic promises, only 77 days into Donald Trump’s presidency”). Jim Pethokoukis of the American Enterprise Institute writes:
In December, frothy investors claimed stocks were surging over the mere anticipation of Donald Trump and the Republican Congress cutting taxes and regulation like crazy. In a viral LinkedIn post, hedge-fund billionaire Ray Dalio went positively metaphysical. He argued that Trump’s pro-business attitude could “ignite animal spirits” across corporate America and “spark a virtuous circle” in which capital pours into America, boosting the economy and attracting even more capital.
Lots has happened since then, including Trump bullying businesses to keep jobs in the U.S., his failed travel ban, and the humiliating collapse of health-care reform. Even tax cuts, the veritable raison d’être of the modern GOP, are looking surprisingly iffy. And lo and behold, for the past month, stocks have been drifting lower.
Second, with the exception of some regulatory reform much of his agenda is counterproductive. A trade war, immigration restriction and a misguided “buy American” stance will make the economy less vibrant.
Trump would do far better to stop crowing over temporary economic phenomena and relying on idiosyncratic action (strong-arming a few companies who planned to keep some jobs here anyway). He and Congress should be realistic about tax reform, pursuing attainable corporate tax reform that would remove loopholes and broaden the base while lowering the rate, thereby making the United States a more attractive place to invest and hire. Like most politicians, he has not thought seriously about the root of the lackluster economy — slow productivity gains. For productivity to improve, the country must invest in workers and technology. Trump needs to look at positive inputs — research in R&D (not cuts as he has proposed), increased postsecondary school options, worker retraining and apprenticeships and infrastructure investment.
The economy was nowhere near as dire as Trump claimed during the election nor as glowing as he claimed just weeks ago. What it could use is steady, modest efforts to boost productivity and open foreign markets. Above all, Trump should do no (more) harm.