President Trump gave the game away on Thursday, the day before the jobs numbers were released by the Labor Department, when he tried to spin the jobs numbers. He tweeted: “Really Good Job Numbers!”
They aren’t. The Post reports: “The U.S. economy added a disappointing 130,000 jobs in August, the Labor Department said Friday, heightening fears that President Trump’s trade war is starting to bite and the U.S. economy may be hitting a rough patch.” The expectation was 160,000 jobs gained. Moreover, June and July jobs numbers were reduced by 20,000. It should concern the president that in 2019 “job gains have averaged 143,000 a month, a noticeable downgrade from last year, when job gains averaged 192,000 a month.” Under President Barack Obama, the average job growth was 251,000 per month in 2014, 227,000 in 2015 and 193,000 in 2016.
More troubling for Trump, who promised a resurgence in the manufacturing sector, is the fact that manufacturing added a measly 3,000 jobs. In that regard, former car czar Steven Rattner pointed out on Wednesday, "Whether the United States is headed into recession remains an open question but without doubt, President Trump’s trade war has inflicted serious damage on the American economy — as well as that of other major countries.” He explained: “The big news on Tuesday was that manufacturing contracted in August for the first time since 2016. That shouldn’t have been entirely surprising as the index has been falling almost since Mr. Trump began imposing tariffs in March 2018.”
It is true that manufacturing is only 11 percent of the economy, but Trump was the one who put focus on this sector, and he should be held accountable by his own measure.
It wasn’t so long ago that Trump was touting the optimism of the business community. The tariff war pretty much killed that off. “In the August survey of CEO’s, 62% said the trade war is becoming ‘highly detrimental’ to their outlook and strategy,” Rattner noted. “An even larger percentage (72%) said they did not believe that the Federal Reserve’s switch to cutting interest rates will succeed in sustaining the economic cycle much longer.”
Moreover, Trump’s tax cuts were spun on the basis that they would permanently hike business investment, raise workers’ wages by $4,000 and bring on a new era of more than 3 percent growth. That hasn’t happened. Rattner wrote: “In fact, during the second quarter, new investment fell for the first time since the fourth quarter of 2015. As the 2020 election season continues to unfold, Americans may be surprised to learn that the rate of investment under Mr. Trump — 3.9% — is actually lower than under President Obama (5.7%) after the nation’s economy began to recover in 2010.”
If the economy slows or sinks into recession, Trump in all likelihood will be booted out of office in 2020. But the conservative economists who have cheered and enabled this president should also take time for self-reflection. The premise of the tax cuts and deregulatory steps was that these were actually good for the middle class. Actually, they weren’t. The lion’s share of the tax cuts went to big corporations and the highest income earners; the debt ballooned as the economy continued to struggle.
It’s long past the time that Republicans should stop addressing every economic issue with cuts to the top marginal rates. That is not a formula that brings sustained growth. It brings greater debt and income inequality. This is not an argument for high taxes. It is a recognition that tax reform (making the code fairer and more efficient) is a worthy goal, but not the panacea for sustained prosperity for the working and middle class. Until we address gaps between rural and urban economies, invest in infrastructure and in workers and reform education, it will be hard to raise productivity, which is the key to growth and increased wages. Trump has no idea how to keep the expansion alive, and hence, we see his panic level rising.