It’s simple: Put job cart behind reform horse

D ONALD

Trump promised to create jobs for Americans if he became president. Well, he did (become president) but he hasn’t (created many jobs).

On Friday we’ll see if the last three months of subpar job growth was an unfortunate aberration or if the Trump administration should start worrying.

As it stands after revisions, May’s employment increase was 138,000 jobs, April’s gain was 174,000, and March’s was just 50,000.

Put them all together, and the three-month moving average is just 121,000 jobs. That’s far below the 150,000 jobs a month needed just to absorb people trying to enter the workforce for the first time.

The “experts” expect to see a modest addition of 170,000 June jobs when the monthly report comes out at 8:30 a.m. Friday. The unemployment rate is expected to stay put at 4.3 percent.

President Trump is already fall- ing into the trap that everyone in the Oval Office before him has been caught in. He’s celebrating his administration’s job creation even though the numbers don’t support any kind of jubilation.

If the president were smart, he’d use the slow economic growth to push through his tax reform and health care legislation. Without reform, he should say, Americans are going to have to get used to slow job growth.

To be perfectly honest, monthly and quarterly economic numbers are really meaningless. Government economists will tell you that all economic data produced by Washington is meant to be viewed over longer periods of time.

Each month’s report contains lots of statistical noise — assumptions and revisions that will make the data jumpy. But when reviewed over a long period of time, the data is a whole lot more credible.

Unfortunately for the government economists, Wall Street and the media are impatient. So Friday’s number will generate an immediate reaction.

The June jobs report, like all others, will contain a lot of statistical noise.

One loud addition to the June number will be the guesstimate of the number of jobs created by newly “born” companies that the Labor Department surveys miss.

That model has been adding more than 200,000 jobs a month to the number that the Labor Department reports. June’s guesstimate will be half that amount, so the job market won’t be getting much help from any newbie companies

The problem with seasonal adjustments is that they reverse. Positive adjustments now must be counteracted with negative adjustments later. In other words, what helped the jobs report in the spring will eventually hurt it.

We will soon know whether that hurt begins with Friday’s number.

Federal Reserve members have been expressing concern that the stock market is acting in an irrational manner. This is the same concern Alan Greenspan had when he was in the middle of his disastrous leadership of the Fed back in the late 1990s.

Irrational exuberance, Greenspan called it. And we all learned our lesson when stock prices collapsed during the dot-com bubble. Even worse, Wall Street’s misbe- havior and miscalculations by the Fed led to all the problems in 2007 and 2008.

So what can the Fed do now to get its power back? What can Fed boss Janet Yellen do to make Wall Street behave?

It hasn’t happened since Paul Volcker was Fed chairman in the 1980s, but a surprise, betweenmeeting rate hike would do the trick. As I’ve been saying, the Fed has little reason to raise rates in the first place, because the economy is still weak.

But it needs rates higher so they can be lowered when the economy tanks again. If the Fed happens to get even a short period of reasonable economic growth, an unexpected rate hike would shock Wall Street back into obedience.

I’m not saying this is going to happen. I’m just saying that it has happened before.

My July 4 column was about America’s 241-year aversion to paying taxes and how tax reform — if done wrong — might incite people to act like their rebellious forefathers. Well, a new Gallup survey shows significant support (no surprise here) for middle class tax cuts: 61 percent agreed with the idea, 26 percent disagreed, and the rest couldn’t be awakened to give an opinion. But people weren’t so much in favor of a cut in corporate taxes. Another non-surprise. Thirty-eight percent reacted positively and 43 percent negatively. The rest probably hung up because it was the thousandth unsolicited call they got that week. There was one surprise. Only 51 percent thought their own taxes were “too high.” That was down from 57 percent in 2016 and much lower than the 63 percent who said they paid too much tax in 1986 when the Tax Reform Act was passed. Gallup didn’t call me (OK, maybe I hung up) but unless Washington can persuade the financial markets that any tax reform isn’t going to further break the country’s already broken bank, then it ain’t gettin’ done — not this year and not until the economy is stronger.