January jobs report holds steady, but trouble is on the horizon


The first jobs report of 2018 looks an awful lot like the jobs reports from the last several years. Steve Benen has the January jobs report, Job growth stays on course as 2018 gets underway:

The Bureau of Labor Statistics reported today that the economy added 200,000 jobs in January, up a bit from December’s totals. The unemployment rate held steady at 4.1%, which is very low.

January Jobs

Perhaps the most notable development in the report was the increase in hourly wage growth. Expect a spirited debate over the possible explanations for this, including the inevitable result of low unemployment, the Republican tax cuts, and the minimum-wage hikes that recently kicked in across much of the country.

Also note, once a year, the Bureau of Labor Statistics publishes revised month-to-month job data for the previous year, and that’s reflected in today’s report. We now know that in 2017, the U.S. economy generated 2.17 million jobs – which is a pretty healthy number, though it’s lower than what Americans have seen in recent years.

The economy added 2.3 million in 2013, 2.99 million in 2014, 2.71 million in 2015, and 2.24 million in 2016, making 2017 the worst for job growth since 2012, when the economy added 2.17 million jobs.

Trump Tea-Publicans are singing the praises of their trickle-down “tax cuts for corporations and plutocrats” bill, but as everyone predicted, it is having the intended consequence of exploding the federal deficit. United States Will Hit Debt Limit Sooner Than Expected Because of Tax Cuts:

The Congressional Budget Office said on Wednesday that the United States is expected to bump up against its borrowing limit a month earlier than previously expected, a function of last year’s $1.5 trillion tax cut, which is resulting in less revenue for the Treasury Department.

According to the budget office, the borrowing limit will most likely need to be raised in early March after the “extraordinary measures” to extend borrowing employed by the Treasury secretary, Steven Mnuchin, are exhausted. [Raising the federal debt ceiling will conveniently coincide with President Trump’s deadline of March 5 for a DACA fix by Congress]. The budget office previously projected that the debt limit would need to be raised beyond its current level of $20.5 trillion in late March or early April.

The reason for the change stems from the tax cuts, which went into effect in January and are expected to translate into less revenue for the federal government.

I say the exploding deficit is an intended consequence because it is the two-step dance that the GOP uses to argue  for deeper cuts to government spending, especially safety net programs. Sure enough, the GOP’s alleged boy genius and Ayn Rand fanboy, Paul Ryan, “the zombie-eyed granny starver from the state of Wisconsin,” is already salivating at the prospect of punishing poor people. Ryan renews welfare reform push:

[T]he Wisconsin Republican is back at it again, repackaging his proposals in hopes of gaining traction on welfare reform.

During a GOP retreat here in Appalachia, Ryan urged congressional Republicans to tackle “workforce development.” He messaged the somewhat amorphous phrase as a matter of “helping people”— not a budget-cutting excursive.

* * *

House Republican Study Committee Chairman Mark Walker said “A little remarketing might be in order,” “When we talk about ‘Medicaid reform,’ that’s not a great buzz phrase.”

Senate Majority Leader Mitch McConnell (R-Ky.) said last December that overhauling the social safety net during a contentious election year would only hurt vulnerable Republicans. McConnell and Ryan discussed the matter at a Camp David strategy session and agreed not to move forward with a welfare overhaul using the fast-tracking tool known as budget reconciliation, which circumvents the Senate filibuster.

But Ryan clearly isn’t giving up. And any discouraging words appear to go in Ryan’s right ear and out his left.

This evil GOP bastard’s rumored retirement cannot come soon enough.

Paul Waldman of the Washington Post asks What About That Trump economic boom? It’s mostly hype.

The final GDP growth figures for 2017 are out, which gives us an opportunity to answer this question: Is America currently experiencing a spectacular Trump Boom, in which the economy delivering so much winning that we’re all tired of winning?

The answer is: Of course not. And it would be too much to expect any president to do that in their first year. The problem, though, is that this is exactly what Trump and his most sycophantic advocates are claiming.

U.S. economic growth slowed in 2017’s fourth quarter, missing Trump’s targets: The economy expanded at an annualized rate of 2.6 percent from October through December, below the 3 percent many administration officials and outside economists had expected. [E]conomic growth in Trump’s first year as president was the third best in the past five, and experts predicted that, even with the $1.5 trillion tax cut, it would prove difficult to achieve much more momentum.

[W]e didn’t start out in the first year of the Trump presidency with 3 percent growth. We started out with 2.3 percent growth. Here’s a chart of GDP growth since the Great Recession (data from here):

Screen Shot 2018-02-02 at 7.10.04 AM

Just to be clear, no one is saying the economy is doing poorly under Trump, because it isn’t — it’s essentially continuing along the path it was on before he took office. GDP growth is steady but fairly low, unemployment is extremely low, wages are very slowly starting to tick up, and so on.

[B]efore we leave the topic of Trump’s supposedly amazing first year, let’s look at yearly job creation over the same period:

Screen Shot 2018-02-02 at 7.13.50 AM

The economy added just over 2 million jobs in 2017, which is the lowest since 2010, when we were still dragging ourselves out of the Great Recession.

Of course, that’s not the story you hear from the president. He likes to argue in anecdotes: every time a corporation says it’s going to create some jobs, it’s proof that his stewardship is bringing spectacular results. But in an economy as enormous as ours, corporations are constantly adding jobs and cutting jobs, and the fact that a few thousand are being created here or there tells you nothing about how the entire economy is doing.

Trump may trumpet every time a factory opens, but he won’t talk about, for instance, the steady stream of job losses in the retail sector. And Trump’s more specific promises aren’t being kept, either. Remember how he was going to revive the coal industry? According to the Bureau of Labor Statistics, last January coal mining employed 50,000 Americans, and as of December it employed 50,500 Americans. Quite the coal revival.

For more on this topic, see Coal’s Decline Seems Impervious to Trump’s Promises:

While President Trump has offered some regulatory relief to the industry, market forces still dictate a gloomy future — one largely shaped by the glut of cheap natural gas yielded by the drilling boom in shale fields near here and across much of the nation.

As aging coal-fired power plants are shut — roughly 20 of 380 have closed or are in the process of shutting since Mr. Trump took office — coal’s share of the nation’s power mix has plummeted from nearly half in 2008 to roughly a third today.

Last year, coal consumption in the United States fell by 2.4 percent, falling to its lowest level in nearly four decades. In the early weeks of 2018, national coal production has continued to decline from a year ago despite the frigid winter. A weather-related increase in exports last year yielded a modest gain in jobs, but it is not considered sustainable.

The decline in demand has forced a 38 percent drop in the nation’s coal production in a little less than a decade. Now only the most efficient mines containing the highest-quality coal are able to survive.

Remember that Carrier plant in Indiana Trump worked so hard to “save”? They’ve laid off 600 people.

But isn’t the stock market up, as Trump never tires of telling us? Yes it is — the S&P 500 rose over 20 percent in 2017. Which is not as much as it grew in, say, 2013, when it rose 30 percent and some Kenyan communist whose name I can’t remember was president, but it’s still doing quite well. And if your economic well-being is tied closely to the stock market, that’s good for you.

But for most Americans, the performance of the stock market matters little if at all. At a more fundamental level, Trump is taking the most acute problems the American economy faces and exacerbating them. He’s showering benefits on the wealthy and corporations. He’s moving power away from workers and into the hands of employers. He’s allowing corporations a freer hand to mistreat their employees, pollute the environment, and screw over consumers without accountability. He’s also helping Republicans launch a war on the safety net. The net effect of all these policies will be to increase inequality, the most critical long-term problem the economy faces.

None of that is going to stop the White House from saying over and over that Trump’s extraordinary leadership has made us all prosperous. Nor will it stop Trump supporters from attributing everything good that happens in the economy to Trump, just as they insisted when Barack Obama was president that he had nothing to do with any positive developments.

Jonathan Chait adds, Trump’s State of the Union Address Was Filled With False Boasts and Empty Promises (excerpts):

After depicting the American economy as a bleak wasteland before his election, Trump has rebranded it as a land of unimaginable prosperity, fueled by the hope inspired by his brilliant reforms. In fact, nothing has changed yet: Economic growth and job gains are running slightly behind the pace of Barack Obama’s second term. (The economy created 214,000 jobs per month in Obama’s second term, and 174,000 in Trump’s first year.) Wages have risen at approximately the same level they did in 2016. It is possible that tighter labor markets will produce faster wage gains, or that the deficit spending Trump has enacted will help short-term growth accelerate. But his rhetoric of economic success is based on absolutely no actual accomplishments.

* * *

It is true that Trump has enacted coal-friendly policies. But it is not true that they have worked. Coal is losing market share to fuels that actually are cleaner and cost less. Coal production and employment have barely budged, and the slight improvements they experienced in 2017 owed to temporary demand changes in overseas markets, rather than permanent domestic change that might arrest their long-term decline.

Finally, there is this red flag in the economic data. Drawing Down Savings to Pay for Growth Can’t Last Forever:

The personal savings rate is suddenly under scrutiny. On Friday the Washington Postran a piece calling it a “red flag” in the middle of otherwise good economic news. Today the Wall Street Journal reported on the latest numbers from the Commerce Department, noting that savings have fallen to their lowest rate in more than a decade.

There are various ways of looking at this. Here’s one:

Screen Shot 2018-02-02 at 7.37.02 AM

After the Great Recession, the savings rate stayed steady because households were paying off debt primarily by reining in spending. This was not great for the economy, but it was good for personal finances. Between 2010 and the end of 2015, the difference between debt and savings improved from -6 percent to -4 percent.

That changed two years ago. Since the beginning of 2016, savings have plummeted, but this money is not being used to pay off debt, which has stayed about the same. It’s being used to buy stuff. The difference between debt and savings has fallen from -4 percent to -8 percent.

This is obviously not sustainable. When savings start to run out, households can keep up their spending for a while by maxing out their credit cards. Eventually, though, they have no choice but to cut back on consumption, something that will almost certainly stall the economy when it happens. Before long, that stall will turn into a recession.


  1. Stock prices fell sharply from near record highs Friday, with the Dow Jones industrial average tumbling 666 points, or 2.5%, to close out the worst week on Wall Street in years.

    A market correction would be at least 5%.

Comments are closed.