James Goldsmith: A Prescient View of Free Trade

A discussion on the General Agreement on Trade with Sir James Goldsmith and Laura D’Andrea Tyson.

Tuesday 11/15/1994

For Wages, a Trump Slump

If the Trump economy were so wonderful, why would the speaker of the House feel the need to traffic in disingenuousness? Because the Trump economy isn’t actually so wonderful. For most Americans, it is downright mediocre, and it has deteriorated somewhat since President Trump took office, despite the healthy G.D.P. and unemployment statistics.

.. Let’s start with the good news. The unemployment rate keeps falling, and economic growth is solid. These headline numbers are the ones that Republicans emphasize

.. As a result of the growth, nominal wages — that is, the numbers people see in their paychecks, before taking inflation into account — are growing. You can see the pickup in the gentle upward slope of the chart’s solid gray line. Over the past year, the average hourly nominal wage has risen 2.7 percent.

.. Prices matter, too. When the prices of good and services are rising faster than nominal wages, people end up with less buying power. And that is exactly what’s happening now.

.. Events in the Middle East, Russia and Venezuela have reduced the supply of oil, even as a growing global economy is increasing demand. Trump has aggravated the situation by pulling out of the Iran nuclear deal, further raising oil prices.

.. My best guess is that real wages will do modestly better over the next year, barring another oil spike or an unexpected recession. But there is no reason to think that most Americans are on the cusp of truly healthy pay increases

.. They face too many obstacles:

Right now, Trump is presiding over precisely the wage growth that he deserves: zero.