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:
- Companies that are larger and more powerful than they used to be;
- unions that are weaker; and,
- thanks in large part to Trump, a federal government that keeps siding against workers, be it on
Right now, Trump is presiding over precisely the wage growth that he deserves: zero.
The Great Distractor
Donald Trump’s ‘look over there’ media strategy is a trap that keeps Democrats from focusing public attention on his bad policies.
We didn’t hear much about the administration’s secret plan to bypass Congress (and common sense) to give a giant tax break to Wall Street investors, a possible violation of the constitution and a betrayal of the president’s promises to stand up for the little guy. It’s the result of what I call the “Trump Trap.”
- He pledged to clean up the D.C. swamp, but he made it swampier.
- He said he would make health insurance better, but he actually asked a judge to strip it away from people with serious diseases like cancer and diabetes.
- His tax cuts ballooned C.E.O. salaries and stock buybacks, but real wages are still frozen.
.. But you wouldn’t know it from watching the news. That’s because his unnecessary insults and controversies create a constellation of outrages that deflect accountability for his actions.
.. A person you probably don’t remember is Cheryl Lankford, who also spoke at the convention. She lost her husband, Army Command Sgt. Maj. Jonathan Lankford, to a heart attack while he was serving in Iraq. Left alone to raise their son, Ms. Lankford used her survivor benefits to enroll in Trump University, hoping Mr. Trump’s advice could jump start her career. After paying more than $30,000 in tuition, she got no training. Like so many Americans, she thought Mr. Trump could improve her economic future, but he swindled her and thousands of others. Now the swindle is happening on an epic scale.
.. we tried to get out of the way of the negative coverage of Mr. Trump and his outrageous comments about Mr. Khan.
But the result was that people heard his message, not ours. So much so that after the election, some people thought Mrs. Clinton never talked about people’s economic lives. But she did. It just went into the black hole of the Trump Trap.
.. Mr. Trump never attacked Cheryl Lankford or the other people suing Trump University. Instead, he disparaged the Latino judge in the case, so we spent a week talking about how racist he is, not about how he had cheated working people.
.. Mr. Trump will say and do things that demand a response from anyone who values decency and morality. The result is that he decides what gets attention — and he’s not held accountable.
.. Third, we Democrats have to pick fights that highlight Mr. Trump’s malfeasance. When the president seeks to take away health insurance from seniors or people with cancer, we can’t let that go unnoticed.
.. Candidates: Beware the Trump Trap. The president has promised to spend a majority of his time campaigning this fall. He will call you names. He will come at you with outrage after outrage. It will be very tempting to wear this as a badge of honor to reap the rewards of social media attention and campaign donations. You will think he is drowning in backlash. But
Candidates: Beware the Trump Trap. The president has promised to spend a majority of his time campaigning this fall. He will call you names. He will come at you with outrage after outrage. It will be very tempting to wear this as a badge of honor to reap the rewards of social media attention and campaign donations. You will think he is drowning in backlash. But he will really just be making the debate about anything other than his own failings or the lives of the voters you wish to represent. Your vision and motivations will be obscured and vulnerable to subterfuge.
Before you give Mr. Trump more rope, make sure the debate is on your terms, not his.
Trump’s Economic Claims Are Overblown
And the rate of job growth during Mr. Trump’s first 19 months in office (194,000 jobs per month) is slightly less than the rate at which jobs were added during Mr. Obama’s final 19 months (205,000 per month). So the good news on jobs is the same good news Americans have been hearing for the last three years.
.. Over the first 18 months since Mr. Trump took office, real earnings, which reflect earnings after accounting for inflation, rose at an annual rate of just 0.3 percent.
.. Without these extraordinary interventions, the underlying rate of economic expansion in the second quarter of this year was about 2.7 percent.. Moreover, that 4.1 percent number isn’t heroic. During the Obama presidency, the economy produced four quarters of growth that were higher. And the consensus among private and government forecasters is that the G.D.P. growth rate is likely to ebb quickly, once tariffs are actually in effect and the tax cut gains are all realized. Goldman Sachs, for example, forecasts that the annualized growth rate will fall to 3.3 percent in the third quarter and then taper down to 1.5 percent by the end of 2019... the Trump administration’s policies have done little for the average worker. Mr. Trump’s tax cut delivered 84 percent of its benefits to business and to individuals with incomes above $75,000 a year.
Wages Are Rising in Europe. But Economists Are Puzzled.
In Europe, experts attribute the spike to an acute shortage of workers in countries like Germany, but there are many other theories.
.. Economists there offered numerous theories to explain the phenomenon. The decline of unions has taken away employees’ bargaining power, some said. Globalization, outsourcing, and the easy flow of money and information across borders have also forced workers in wealthy countries to compete with those in poorer ones.
.. Another suggestion is that the rise of companies like Apple, Google and Amazon as industry behemoths has concentrated power in fewer companies and squelched competition. And the so-called sharing economy, exemplified by Uber or Airbnb, has made many people into freelancers with few benefits.
.. In one much-discussed paper presented at Sintra, Uta Schönberg, a professor at University College London, compared data from Germany and France and came to the conclusion that low wage growth and rising inequality were a result of diminished bargaining power by workers.
Flat wage growth in Germany during the last two decades coincided with reforms that allowed companies to opt out of collective bargaining agreements, weakening union power.
In France, where union agreements applied to whole industries and were binding for companies, wages continued to climb and inequality was less pronounced.
.. But France paid a price. While unemployment fell below 4 percent in Germany, it remains above 9 percent in France. The implication is that companies may not hire as much if they are locked into union wage contracts.
.. This hidden reserve of workers is bigger than economists thought, Mr. Talavera said. But in Europe it appears to have finally been exhausted. “That is one of the reasons you haven’t seen wage growth picking up substantially,” he said.