A guide to judging Trump’s progress
President Donald Trump has taken ownership of the nation’s economy, so let’s establish a baseline to track his progress toward making America great again.
After winningthe presidency bypromising to boost jobs, wages, factories and economic growth, consider it basic accountability journalism. Let’s start with jobs.
The United States headline unemployment rate is 4.7 percent, a level many economists argue is near full employment. But as with any statistic, it tells only part of the story.
Trump has insisted that unemployment is much higher because the headline numbers do not include those who have given up looking or nolonger get benefits. One way to include these disc our- aged workers is to look at the percentage of workers between the ages of 25 and 54 who have jobs.
Before the Great Recession in 2007, about 80percent of primeage workers hadjobs, according to data collated by the St. Louis Federal Reserve Bank. That number dropped to 74.8 percent in 2010 and has since climbed to only 78.2 percent.
Some parts of the country werehit harderthan others, and Trump can concentrate efforts in parts of the country hardest hit bythe loss of well-paid blue collar jobs, such as WestVirginia, Pennsylvania, Ohio, Wisconsin and Michigan. Those are the states that delivered Trump’s majority in the electoral college, andall five have unemployment rates well above the national average.
If Trump can raise the labor participation rate andbring down unemployment in the hardest-hit
The key to increasing the percentage of Americans in the workforce is to boost wages.
states, his policies should be considered successful.
The key to increasing the percentage of Americans in the workforce is to boost wages. Many proud unemployed factory workers simply won’t consider a job that pays less than $15 anhour,nor are they willing to move away from their communities to find one, according to studies by the American Community Survey and the White House Council of Economic Advisers. Those findings are proven out by Trump supporters demanding jobs that pay well to save their shrinking communities.
American household income, when adjusted for inflation, peaked in 1999 at $57,909, then bottomed out at $52,666 in 2012 and has since risen to $56,516. But looking at the median alone obscures the fact that almost all of the income gains havegone to the wealthiest Americans, while the middle class has shrunk and the percentage of people near the poverty line has grown.
Theinflation-adjusted value of the minimum wage peaked in 1968, the same year our nation recorded the lowest level of income inequality, andverynearly the same time that the percentage of middle-class Americanspeaked.
Since 1971, the proportion of Americans considered middle class has dropped from 61 percent to only 50 percent in 2015, according to Pew Research Center. The best measure for g aug in gT rum p’ s success on wages is to watch the poverty rate, which was 13.5 percent in 2015, andto track whetherthe proportion of Americans making middle class income also rises. Trump can boost the labor participation rate byraising the minimum wage and indexing it to inflation.
Increasing manufacturing employment will be Trump’s biggest challenge. While he likes to blame American losses on jobs moving overseas, most economists agree the real culprit is automation.
Several American manufacturers have announced plans to build factories in the U.S ., and some may even close foreign factories. However,newU.S. factories will need the latest robotics and automation to compete with cheaper foreign labor. The few new jobs created will require workers skilled in robotics, not the many machinists waiting for jobs tocomeback.
Trump has also promised to accelerate economic growth, whichis currently at 1.7 percent, byoverhauling the tax code andcutting regulations to encourage business spending. Here he has a far greater chance of directly impacting gross domestic product.
Unfortunately for him, the United States has recorded 80straight months of GDP growth, the fourth-longest streak in our nation’s history. Simply sustaining minimal growth through the end of 2020 wouldset a record.
The odds, though, are 65 percent that a recession will strike during his first term, andthere’s nothing he can do about it. That’s because in truth, the president has little power over the economy, according to research by the National Bureau of Economic Research.
Economists Alan Blinder and Mark Watson found that oil prices, worker productivity, international economic conditions and consumer optimism have a far greater influence on the U.S. economy than the president.
Yet fairly or not, Americans judge their leaders by their pocket books. Trump made a lot promises and now occupies the White House. What happens over the next four years is on him, and those who voted for him. Chris Tomlinson is the Chronicle’s business columnist. His commentary appears on Sundays and Wednesdays. He also posts a daily news analysis at HoustonChronicle. com/Boardroom. chris. tomlinson@chron.com twitter.com/cltomlinson