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Tuesday, January 21, 2020

Three Years in the Trump Economy, Part 1

We now have a full roster of employment data for 2019, which gives us three full years of record for what Trump has done for the U.S. economy. It is a delightful story.

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The Trump economy is impressive. It is not as great as it could be; if we rolled back government to its core functions we would see four-percent growth, or more, on a regular basis. But for now, we should be grateful for a president who knows what it takes to get an economy going. 

As Table 1 shows, almost every industry is better off than under Obama. 

To make Trump's achievements even more respectable, we compare Obama's entire eight-year presidency to Trump's first three years in office. Already now, with not even a full first term under his belt, Trump can point to private-sector job growth that is close to what it took Obama two full terms to achieve. With the closing of 2019, the Trump economy has created more than 90 percent as many jobs in three years as the Obama economy did in eight years:

Table 1 (thousands of jobs added)

Obama 8 Trump 3
Private 7,396 6,700
Govt 285 352
Svcs 8,696 5,717
Goods 1,585 1,335
Ed Health 3,411 1,631
LH 2,224 1,081
PBS 2,322 1,348
Fin Svcs 81 389
Info 190 30
TTU 959 644
Retail 543 37
Manuf 1,052 487
Constr 434 765
Mining 99 83
Other Svcs 176 241

Perhaps the most striking number is the manufacturing turnaround: under Obama we lost over one million manufacturing jobs; since Trump took office we have gained almost half a million jobs in that industry. Mining has also turned around: from a loss of 99,000 jobs to an 83,000-job gain. 

Construction jobs have soared, of course, but what is even more remarkable is that the information industry has gone from losing 190,000 job under Obama to gaining 30,000 jobs under Trump. And that is, again, a comparison of eight years to three. You would expect the information industry to have flourished under a president who spoke widely and loudly about the new economy of the future, yet it was Trump that industry needed in order to grow.

The small loss of retail jobs is countered significantly by the surge in jobs in TTU, or Trade, Transportation and Utilities. This industry produces infrastructure and logistics services, which includes warehousing and shipping products for online retailers. The decline in traditional retail - which again is minuscule - has been more than compensated for by the rise in logistics.

One of the most impressive comebacks is in financial services. This industry was under the thumb of Obama's regulatory machine, creating only 81,000 jobs in eight long years. And that is nationwide. With Trump, however, banks and other financial companies have added 389,000 people to their payrolls - a 480-percent better record in three years than during two entire terms with Obama.

The only downside of the Trump record is that government payrolls have expanded. Obama deserves credit for having presided over an economy that reduced government employment by 285,000 - although one could suspect that this has more to do with his disdain for making deals with Congressional Republicans than anything else - and Trump deserves criticism for this rise in government employment. 

Looking at the federal government, the overall picture is mixed. On the one hand, the federal government has added 36,700 more people to its employment roster since Trump took office. On the other hand, it seems to be the case that these new jobs have been allocated to where they actually mak a difference for the better. The Bureau of Labor Statistics has not yet reported breakdown data for December and therefore not for the whole year of 2019, but going by November numbers, almost all of that increase in employment has gone to our military and our federal hospitals: 

  • The Department of Defense added 11,300 jobs in the first three Trump years;
  • Federal hospitals increased employment by 20,100 in the same period.

Since DoD only accounts for about 25 percent of the total federal government workforce, it is good to see almost one third of the new federal-government jobs be allocated to them. Likewise, it is nice to see that the Veterans Administration will be able to give a well-deserved boost in health care services for our veterans. 

The bulk of growth in government employment has taken place at the local level. To some degree, we cannot criticize Trump for this, although his administration has signed budgets increasing federal spending, sending more dollars down to states and local governments. 

Of the 254,000 new employees that local governments have hired so far under the Trump presidency, 80 percent have gone into education and local government administration. The distribution between the two categories is roughly equal, suggesting that while government bureaucracy has stagnated at the federal and state levels, it seems to be sprawling across our counties, cities, towns and school districts.

So far President Trump has been very good for the U.S. economy, outperforming his predecessor in almost every category. As far as jobs creation goes, it is particularly interesting to see that the Trump economy has already achieved more than 90 percent of the private-sector jobs creation that the Obama economy did in eight years. It is not far fetched to predict that by the end of 2020 we will have added as many jobs in the private sector in one Trump term as we saw under two terms with Obama.

Don't tell me the best days of America are behind us!

More to come on the first three years with Trump. Stay tuned.

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