Unemployment

The unemployment rate in January 2009 was 7.8% . In January 2017 the unemployment rate was 4.8%. However, the participation rate in 2009 was 65.7 and in January 2017 62.8%.   If you look at the drop in participation the total unemployment drop in 8 years of Obama’s administration was 0.1%.  The effective unemployment rate was 4.8+2.9=7.7% in January 2017.

Official Unemployment Rate Participation Rate Actual Unemployment Change
2/1/2009 7.8 65.7 7.8
2/1/2017 4.8 62.8 7.7 -0.1
8/1/2018 3.9 62.7 6.9 -0.8

In 18 months since President Trump has taken office the unemployment rate has fallen from 4.8 to 3.9% and the participation rate has hovered very close to 62.7% although august 2018 showed 62.9.  This means that Donald Trump has lowered unemployment by 0.8% in 18 months in real terms compared to 0.1% in 8 years.

Due to the increasing size of the labor force the stabilized participation rate has meant a huge increase in jobs.

In January 2009 there were 154,200,000 jobs in America and by January 2017 the number of working Americans was 159,700,000 or 5,500,000 more Americans working.   Of course the population of America climbed dramatically between 2009 to 2017 went from 306 to 325 million people.  In other words the population rose by 19 million and only 5 million jobs were created meaning the vast majority of the people who were added to America didn’t get jobs.  This is partly why the participation rate fell so dramatically.

#employed PopulationUS Immigrants %age Americans w job
2/1/2009 154,000,000 309,000,000 49.84%
2/1/2017 159,500,000 326,000,000 1,700,000 48.93%
8/1/2018 161,500,000 326,500,000 49.46%

In 2009 working Americans were half the American population.  By 2017 we were below 50%.  The US was dropping the percentage of people employed in the economy.  Over the last 18 months Donald Trump has created 2 million more Americans with Jobs up to 161.7 million.

As you can see in the above chart the %age of Americans with jobs fell almost a percentage under Obama and has climbed back half in just the first 18 months of Trump’s administration.

At 2 million over 18 months Donald Trump will generate 10.5 million more real jobs by 2025.  That is twice the rate of Obama.

Yet based on the immigration rate we are currently taking in 2 million legal and illegal immigrants a year plus we see a natural growth of job seekers combined with those leaving the labor force of maybe 1.5 million/year.   This means we need 2.5 million jobs/year for the remaining 8 years of Trump’s term if we don’t change the immigration rate.   This would be achievable at a growth rate of 3.1%/year GDP growth.

This is a very high number and also requires additional growth to absorb the non-participating workers back into work.  If we cut the immigration rate down from 2 million/year to 1 million / year we could get the breakeven GDP growth to approximately 2.5%.

These are ballpark numbers but suggest that cutting the immigration rate temporarily in half would dramatically produce better results for the economy and Amercians living here.  Trump may get 4% growth over the next few years but it wouldn’t hurt to temper immigration.

We are not talking a cutoff.  The US already immigrates more people under any measure and even with half the immigration we would still be the largest immigration destination in the world.

From 2017 to 2018 the employment has climbed by 2,000,000.  The population has increased by 450,000.   In other words MORE jobs than new Americans.   This will result in an increase in participation rate.   This is a good thing.

The fact is the numbers show the growth rate produced by Obama did not produce enough jobs to compensate for people entering the workforce and the millions pouring into the country through immigration.

In 2017 1.7 million legal immigrants poured into the US, 70% of which are what is called “family preference immigration.”

There is a practical issue.  The Democrats like to argue this is a moral issue how many immigrants to take in.  This is absurd.  If we accept more immigrants and the growth of the labor supply exceeds the creation of new jobs there will be higher unemployment and pain in America.

This can be solved.  Just grow the US economy faster.  Easier said than done.

US GDP Growth Implied Job Growth Actual Job Growth Efficiency Actual Job Seeker Growth %New Americans getting jobs
1982-2005 3.50%
2/1/2009
2/1/2017 1.50% 18,480,000 5,500,000 29.76% 11,169,000 49.24%
8/1/2018 2.50% 5,981,250 2,000,000 33.44% 314,000 636.94%

Obama’s 8 year average growth rate is 1.5% or less than half the period preceding it.  This is the slowest growth since the great depression.  With this growth the US could was not generating enough jobs to compensate for the growing labor force and immigration.  Only 49% of potential new job seekers were able to get jobs.  This led to a dramatic drop in the participation rate.

Advocates for immigration claim immigrants even illegal immigrants generate wealth and grow the economy faster.  This didn’t happen.   Illegal immigration did slow down during the Obama years probably because even Mexicans and Central Americans knew that there were no jobs in America.

Another very damning statistic from the Obama era is the full-time jobs.  These grew at an unbelievably anemic 1% over the entire term of his presidencies.  The reasons for this are likely the combination of higher medical insurance premiums discouraged companies from offering jobs with full benefits.   Vastly more part-time and temp jobs were created.  It was also due to the anemic growth rate which made people not want to make long term commitments to employees.

Lack of full time jobs is a serious issue for the middle class.  They have to take multiple jobs and the stress and unhappiness that results from working 2 or 3 jobs, constantly searching produces problems.  The suicide rate and drug addiction rates for opioids massively increased.

Probably the thing that was most scary about the Obama economy is that it had drained the savings accounts and depressed house prices for middle class.  These people have 80% of their wealth tied up in their home.  Wealth of middle class people dropped by 40% during the Obama years.

This also increases anxiety and depression.  People see their lifes savings disappearing.  Not a good feeling.  Middle and lower income people do not have the buffer that rich people have to sustain long periods of slow or negative growth.  They were draining their wealth prodigiously.

As one economist I respect pointed out:  If the US had gone into another recession before the middle class recovered its wealth we would have seen many people lose their home.  Maybe 100 million Americans could be on the street and we would be looking at a great depression scenario.

If anyone doubts if the tax cuts were necessary think of that.

We must get the middle class wealth restored or the next recession will see much larger consequences than any previous recession.

We already see that in LA and other places there is a significantly higher homeless population that has grown.  This has somehow not made the news.  More evidence that the economy run by liberals during the Obama years was unsatisfactory.

 

Many countries have policies that limit immigration or even send people out of the country when unemployment rates rise.  (See Switzerland for instance.)

This kind of policy is “rational.”  The US can be generous with its immigration policy but to the extent the immigrants can’t find jobs they can’t generate wealth and we are on the hook with social services.  The problem is exacerbated by illegal immigration.

Another important consequence of too many employees for the jobs is it keeps wages down.  Productivity tends to correspond with wages.  This means if we pay people more employers will utilize them more efficiently.  They will buy capital equipment (i.e. robots or computers or whatever) to help them get more value.  If they can’t do this then inflation will set in.

The reason this has not been a problem in the past is that for the years 1982-2005 the US was growing as fast as almost any country in the world, at an average annual rate of 3.5%.  We had a plethora of jobs being created.

Democrats said that growth rates above 2% were not sustainable in the US anymore

If that is the case then importing nearly 2 million legal immigrants is expanding the need for jobs by 1 million per year but as you can see the US is currently even under Donald Trump generating only 1.5 million real net jobs a year.

If the Democrats think that growth rates cannot be very high then how can they be for unlimited or current immigration rates of 2 million especially as data shows that 80% of the current immigrant mix is low skill labor or unemployable.

The goals of the Trump economic plan

Trump is aligned to my thinking on what we have to do.   He understood that the situation in America was FAR from acceptable.  That there was tremendous anxiety and concern for the future.  Not just for white middle class Americans who were presumed to be voting based on racist basis but quite the opposite.

All Americans were suffering except for the very upper class who had recovered from the recession.

We have to restore the income and wealth of the middle class.   This is no longer an option.  The consequences of failing to do this may be much greater than anybody anticipated.  Too many people have had their wealth destroyed by the extended period of slow growth.

The obvious first strategy of Trump is to create more jobs.  We were told Obama created lots of jobs and his performance is just being “taken credit for by Trump.”   This is false as I showed.

More important it is the type of jobs that Trump is creating that is critical.  We don’t need more millionaire jobs.  We need jobs for average people.  These used to be called blue collar.  Whatever you want to say we need to reconsider trade policies or whatever to create more opportunity for good jobs for the middle class.

If that means protecting certain types of work then so be it.  I don’t think we have an alternative.  The traditional argument that I used and thought was that free trade should produce different jobs as people we traded with bought our services and goods.  The problem is that the Chinese in particular didn’t do that.  In fact, the opposite they not only didn’t buy American goods and services but they stole our IP on a massive scale to compete in all kinds of industries the US had significant advantage in and should have been the places middle class people could have gotten jobs as the Chinese produced lower cost clothing and other products.

This didn’t happen.  As I said the Chinese stole our IP as much as 1-2 TRILLION dollars.  It’s a huge number.  By not buying American products and services the US lost 1-2 trillion in trade over the Obama years and Bush years.  If the US had this income during those years the problems above would NOT have been.  If China had simply been a fair trader much or all of the anxiety of the last 8-10 years would not have been nearly the problem it is today.

Donald Trump has clearly been doing everything to achieve what he spelled out in the campaign to help the middle class.

He is invigorating the economy through lower regulation and lower taxes.  He is cutting illegal immigration and he is pursuing trade policies to force our trading partners to stop stealing and to stop using predatory practices.  He is imposing protections for American industries which allow US companies to expand middle income jobs.

He has also put incentive for companies to repatriate earnings they they were sending offshore, some 2 trillion to external countries by offering one time benefit in bringing back previously earned wealth.

By lowering tax rates Donald Trump has brought US tax rates in line with competitive countries around the world.  This will encourage other countries to invest and grow business in the US.  These lower tax rates also encourage companies to take money out of slow growing but tax free investments such as municipal bonds and put them into their companies.

All of these things encourage the private sector to make bets on the US economy.  This is causing a surge in low skilled jobs and resurgence in middle class jobs.

He has done things like telling companies that he is going to impose penalties on companies that simply manufacture goods outside the US to import them.  By imposing trade tariffs he has encouraged companies to build here rather than exporting here.

The effect of all these changes will be long lasting and enormous.  All the talk you hear that the Trump economy is simply the Obama economy is absurd.  These changes are changes that Democrats would never have done moreover just like in the Reagan era the long term growth of the US will double, maybe triple for a while.  After another year or less there will be little doubt this was not a result of anything Obama did in anyone’s mind.

This doesn’t necessarily mean a long rise in stock prices.  All of this will put pressure to increase interest rates.  Those rates were the main way Obama kept the economy from doing even worse but those interest rates were not sustainable.  We had close to zero percent interest for a decade.  At some point interest rates have to rise to a functional level.   Rising interest rates have a deleterious effect on the stock market.  Don’t bet too big on the stock market.

Many people wonder why we haven’t seen an increase in wages yet.

The reason is that the participation rate has still not fallen.  In actuality our real unemployment rate is not 3.9%.  It is still at 6.6% or higher.  In effect until we get a lot more jobs created there won’t be pressure to raise wages across the economy.

Nonetheless there are inklings of some increase in wages.  The imposition of tariffs and higher inflation will drive wages up more but real wages will depend on growing productivity and the investments in plants and manufacturing to pay off.

In the meantime we can look forward to higher real estate prices as people’s surety of their jobs increases and some do well we will see them being able to afford homes again and buying up.  We should see a rise in home prices especially in the middle of the country.  Partly what should help this is the removal of the tax advantages of the high tax states this will push people and jobs to the middle of the country.  This should create demand on homes in those areas.  Countervailing that is higher interest rates which will make homes more expensive.

Donald Trump is just executing in the most effective way possible everything to boost American productivity, increase growth in GDP and boost the middle and lower classes.  Something Democrats talk about but have no idea how to do or find that doing these things are contrary to their philosophy.

BY DEFINITION DEMOCRATS COULD NOT HAVE DONE THIS BECAUSE their policies are diametrically opposed to these moves.

Democrats have talked about taxing the rich.  While this sounds good (I was a socialist in my early years like many young people.) . The problem is that being unfriendly to business suppresses business.  You can’t expect to accomplish all I mention above if your basic attitude is antagonistic to business.

Democrats are already talking about trying to impose higher taxes if they get any control.  I don’t believe they will but obviously they would not do what Republicans have done.

They also have a globalist mentality and decry the middle class as racist hanger ons.  They denied the problem even existed.  They would not likely have fixed anything they didn’t even acknowledge was a problem.

The ruling class of the Democratic party as of 2016 was clearly the “donor class.”  These people are globalists who believe in free trade above all else, free movement of labor and making the US like every other country in the world.   These policies would not allow and are diametrically opposed to the American people being prioritized.

The logic of globalism is that in the end we want to bring equality to all nations but similar to socialism it leads to the destruction of all nations.  Until the world is truly more equal by each nation getting its house in order we cannot just allow free movement of labor.  It will destroy the ability of the US to produce superior results for the middle class.

You may wonder isn’t free trade supposed to produce better results?  Yes.  However, we don’t have true free trade between some countries.

You may wonder why shouldn’t the US let in everyone that wants to come here?  Okay then you are stupid.  Look at Venezuela and many other countries.  Most countries of the world are corrupt and broken.  Ultimately a free border policy or unlimited immigration or the continued levels of immigration we had in the 80s would result in numerous bad results including a massive growth in the US population well beyond the ability of us to absorb and integrate them.

Some believe integration is unnecessary.  Those people believe in anarchy and that the US isn’t special.  We can look around and see that the US is special.  Most countries are s***holes as Donald Trump correctly pointed out.  They reel from one corrupt leader to another with their people unable to stop or reign the unequal justice and the way people buy power and favor.  The US extremely unique.  We have our constitution which gives us a security that our system eventually will be controlled by the majority of the people.

Some people may call majority rule or populism as some kind of evil as if Naziism was purely a result of the average person in Germany hating people.  The assumption of the left is that the average person is bad.  Even though they claim to “want to help” the average person they actually despise them.  They believe elite thinkers and bureaucrats can make better decisions.

Our constitution as I point out over and over is based on a radical notion that the people will be able to make a good decision, better than any elite.  250 years of extraordinary history has shown this to be the case.   Other examples of long standing working democracies that succeed are Switzerland and Britain.

We cannot accept people into this country faster than we can educate them on the values inherent in the American proposition of freedom, justice and constitution.  We want citizenship in America to be something prized, not something people deride or ignore as irrelevant.  We must have a legitimate immigration system and end illegal immigration.

98% of all immigrants are non-white.  Having any immigrants at all diversifies America.  America takes in more immigrants than the rest of the world combined.  Even if we cut our immigration rate in half we would still be the most generous country and gaining diversity.  A slowdown in regular immigration to try to induce higher quality immigrants and elimination of illegal immigration is a good thing in a lot of ways.

We are not creating a lot of lower skill jobs.  The jobs we are creating we want to give to existing american citizens first.  So, we don’t need a lot of additional low-skill immigrants.  This may be a change in what America has done in the past but our immigration is a result of our collective laws not a part of the constitution.

When you see this you see that Donald Trump is not xenophobic or trying to make America white.  He is trying to control immigration to allow his other economic policies to be effective.  If arbitrary numbers of immigrants (legal or illegal) are allowed in then he might as well not have done his other policies on the economy.  There is no point.

If you look at this at all rationally you see that Donald Trump is doing what he promised to help the middle class and boost American security and prosperity for the long haul.  It’s indisputable and in my opinion it is not even political.  Who can argue that we want to be richer and help the average American?  Except of course non-Americans or suicidal people.

The Democratic parties ideas of identity politics, high or even unlimited immigration, high taxes, anti-business or even socialistic policies is bizarre given the incredible success already of Donald Trump’s policies.  We are now the most successful country in the world again.  Europe, Asia and other places are having lower growth and threats of recession.  The US is booming.  In the middle of the best numbers for blacks and hispanic employment and wealth growth Democrats preaching socialism is insane.

The Democrats have an insane hatred for Donald Trump.  They have claimed all kinds of evil things will happen but they aren’t happening.  Instead of acknowledging that Donald Trump is not Hitler or going to crash the world they refuse to treat him in a normal or at least sane way.  They keep arguing for ridiculous ideas of impeachment and that he is in chaos.

Donald Trump has accomplished more for America than Bush and Obama combined in less than 2 years.   If he is chaotic then we should all be chaotic.  I think the Democrats need to learn about his management style instead of constantly deriding it.

I think part of the problem is that Democrats today are incredibly corrupt.  They are mentally unstable and have fantasies that aren’t real.  They fight problems that aren’t problems and they don’t seem sincere in wanting to solve any problems or have any solutions.  They only have criticisms.  The problem is they didn’t run things so well when they were in power so their criticisms are faced with the obstacle that most of what they criticize were the problems they created and did nothing to solve when they had power.  So why should we believe they will solve them now or have any answers now they didn’t have back then.

No.  There will be no blue wave.  If there is it will still be composed of people who will work with Donald Trump more and help him achieve his objectives.  The insane hatred of Donald Trump must end.

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