Trump’s Economy (Updated)
July jobs report shows signs of weakness.
Via Forbes: Unemployment Rose To 4.2% In July As Hiring Fell Sharply.
About 73,000 nonfarm jobs were added last month, below economists’ projections of 115,000 and less than half the 147,000 added in June.
Some comparative data.
An average of 130,000 jobs added per month this year is the weakest since the January to June period in 2010, as the U.S. economy recovered from the Great Recession. An average of 168,000 jobs were added per month last year, compared to the roughly 400,000-per-month average from 2021 through 2023 as businesses recovered from COVID-19 lockdowns.
In regard to tariffs:
It’s not immediately clear whether Trump’s tariffs have directly affected the number of jobs available, though retail and automotive sectors have recorded an increase in layoffs. The retail market cut nearly 80,500 jobs in July, a year-over-year increase of 249%, according to the Challenger report, as companies cited tariffs, inflation and economic uncertainty.
The bottom line to me is this: Trump inherited a pretty healthy economy. He could have done nothing and claimed credit for things continuing as they were (which was more or less what he did in his first term, having inherited a healthy economy from Obama). Instead, he has been playing havoc with the global economy and is creating conditions to damage, not invigorate, the economy.
The notion that all of these “deals” are making things better for US trade is nonsense.
For example, Krugman notes the following (to my point about doing nothing), I Coulda Made a Better Deal.
When I point out that Trump’s idea of trade deals seems counterproductive even in terms of his claimed goal of boosting manufacturing, I get some pushback from readers along these lines: “Oh, yeah? If you’re such an expert on trade negotiations, tell me what deal you think you could have made.”
OK, I can answer that. If I had been in charge of negotiating with the European Union, I would have been able to get a deal with the following components:
· Very low tariffs on U.S. exports of manufactured goods to Europe, on the order of 1 percent
· Near balance in bilateral trade, with U.S. exports to Europe close to 90 percent of our imports from Europe
· U.S. companies allowed to operate freely in Europe, earning hundreds of billions a year in profits
· European corporations investing more than $150 billion a year — real investment, not loans — in the United States
Why do I believe that I could have negotiated a deal like that? Because that’s what U.S.-EU international transactions actually looked like in 2024. So that’s what we could have gotten by doing nothing.
Emphasis mine.
Also, Krugman: The Meaning of a Weak Jobs Report.
Contrary to myth, tariffs don’t necessarily cause high unemployment. They make the economy less efficient and poorer, but don’t necessarily reduce the total number of jobs. For example, Britain in the 1950s had high tariffs and import controls, but also full employment. The claim that Smoot-Hawley caused the Great Depression is a myth, one fostered in part by anti-Keynesians who didn’t want to admit that the problem was inadequate demand and the answer fiscal stimulus.
But Trump has brought something special to the mix: Not just high tariffs, but unpredictable tariffs. Since April 2 nobody (probably Trump included) has had no idea what tariff rates will be for the next few months, let alone for the long term.
Heckuva job, Donnie!
Update: More bad numbers.
Via the NYT:
Government employment fell in July as the federal government continued to shed jobs amid the Trump administration’s efforts to slash the work force. The federal government lost 12,000 jobs last month, and is down by 84,000 jobs since the start of the year.
I would note: this is directly a result of Trump policy.
Manufacturing employment also declined by 11,000 jobs in July, the third straight month of job losses in the industry. Mr. Trump’s tariffs are intended to boost manufacturers and encourage consumers to buy domestically. But steeper tariffs have pushed up costs for foreign parts, which has hurt some manufacturers.
But, I thought tariffs were supposed to enhance manufacturing!
Via CNBC: U.S. added just 73,000 jobs in July and numbers for prior months were revised much lower.
…the June total of 14,000 but below even the meager Dow Jones estimate for a gain of 100,000, the Bureau of Labor Statistics reported Friday. June and May totals were revised sharply lower, down by a combined 258,000 from previously announced levels.
[…]
The June total came down from the previously stated 147,000, while the May count fell to just 19,000, revised down by 125,000.
This will, no doubt, be described as either “fake news” or “some, something, Deep State.”
Here’s a chart:
This is not the Epstein distraction story I would have landed on, but, hey, it’s more effective than anything else they threw out.
Funny, I remember reading, during the 2016 campaign (?), that had Trump simply invested the money he inherited from his daddy and done nothing he would have been richer.
Taco trade opportunity?
IMO, stock traders usually don’t react to developments, they overreact to them. Meaning as bad as the negative moves may be now, they’re not quite reflective of real conditions.
So, don’t read much into it.
The time for reading into it is after months of market losses and consistently rising unemployment. But by then everything’s pretty obvious anyway. it’s easy to predict the present.
@Kathy:
Sure. But would suggest we can’t read nothing into it all, either.
We must launch an investigation by the FBI and the CIA into the conspiracy behind these false statistics. The economy under Trump is the best in history and getting better! Just yesterday I filled my car with $1.92 a gallon gas.
@Kathy:
A 6 month trendline, taken with the spiraling dollar during the same period, should give pause.
It ain’t nothin’
@Steven L. Taylor:
@Daryl:
Oh, it’s bad. No question.
But how bad?
Is it trumpcession bad? Blue tsunami in 2026 bad? Cancel midterm elections in 2026 bad? Or Bush the elder in 1992 bad?
The latter cost the late Republican party the presidency, but it’s doubtful a similar mild downturn would cost the Republiqan party that much.
The other thing is that businesses tend to adapt to changing conditions, even adverse ones.
It’s bad, but maybe not Taco death knell bad.
@Kathy:
The guys a cockroach. Nothing will kill him.
Just going to note that if July’s numbers eventually get adjusted down by an average of what May and June’s revisions were, that’s negative territory.
Of all the kings in history, El Taco had to go and make himself Pyrrhus II.
More for Dr. Taylor’s North Korea files:
Trump fires labor statistics boss hours after weak jobs report
@Jen:
At some point the eco numbers coming out of the admin won’t be worth the paper they’re written on.
Firing the labor statistics person is so reminiscent of kings killing the messengers when they brought him good news. It’s also clearly a case of Trump wanting ideal numbers making him look perfect. The lower jobs number made it more likely that the Fed cuts rates or at least balance that against the increase in inflation numbers in the same report. Trump appears to want to be able to tell people that absolutely everything is perfect. All the numbers we want increasing are doing so and all the numbers we want decreasing are doing that too.
Steve
@Jen: It’s good that a president sees a problem and takes quick, decisive action to fix it.
I was worried that the administration had their thumb on the scale before this, because a thumb on the scale was inevitable. Is it unfounded conspiracy thinking when you just assume the thing that was obviously going to happen had already started happening?
@Jen:
@steve222:
Stalin was disappointed the 1937 census in the USSR showed far less population growth than he wanted. He had the people in charge of the census arrested, and executed some of them.
Salient on the link: “Stalin, however, didn’t care about getting accurate data. He wanted propaganda.”
The results of that census was never made public.
I’d expect the next month’s jobs report to be “delayed.”
@Kathy:
Called it!
https://outsidethebeltway.com/welcome-to-august-forum-2/#comment-3011093
https://outsidethebeltway.com/welcome-to-august-forum-2/#comment-3011100
Interestingly, the jobs growth there has been seems to be in healthcare and social assistance sectors.
Manufacturing seems flat, and traded goods and services declining.
Doubtless the administration will now try to press harder for interest rate cuts to goose the consumption demand.
If it wanted that, perhaps it might have thought harder about adding inflationary pressures re tariffs and a massive budget deficit, which needs the bond market to fund.
The Fed is likely to be very wary of rate cuts at this point.
Next stop: compulsory bond purchase mandates, perhaps?
What could POSSIBLY go wrong?
@Jen:
Shooting the messenger always ends well, obviously. 😉
@Kathy:
That is not going to improve the population growth.
@steve222:
It’s a message to the caddies that keep his score card as well…
“The party told you to reject the evidence of your eyes and ears. It was their final, most essential command,”
@Gustopher:
It’s not entirely clear how many people were executed during Stalin’s terror, or how long prison terms lots of people affected population growth. It certainly didn’t help.
It’s a classic dictator move, too: implement policies or undertake actions that damage or destroy your goals, and blame it on the people who report the results.
You know, the dictator cannot fail, he can only be failed. That should be El Taco’s slogan for his next campaign (there will be an attempt, at least, at a third term, if he’s still alive).
See my comment just above.
Also, he probably believes much of the feculence he spews out from his facial anus. Like tariffs are paid by foreign countries, there won’t be a deficit if he says so, etc.
What I wonder is what specifically happens to the bond market if the Fed, led by Powell, lowers interest rates in fear for their lives.
I think for a country with such a large deficit, and larger debt, the one thing worse than higher cost debt (debt paid at higher interest rates) would be insufficient uptake of debt instruments. They’d have to resort to running the printing presses overtime to make up the shortfall.
@Kathy:
“Downfall” was not fiction.
And Stalin barely avoided his own version of Downfall in 1941.
You can rule internally by fear; but you can’t change external reality by fear.
Or at least, not when you have sown the wind, and must perforce reap the whirlwind.
@Kathy:
As I suggested: compulsory bond purchases for US institutions?
iirc some Trumpians have mooted forcing US allies to purchase US bonds.
At the same time (in some cases) as enabling a “controlled” dollar depreciation and lower import prices for key resources.
And,of course, increased defence expenditure which must, somehow, result in more purchases of US manufactured weapons systems.
There are lot of administration members and supporters who are living in a fantasy world.
US oriented states are going to try to “Trump whisper” to minimize economic damage, and security risks.
But there are still going to be breaking points.
It’s rather unwise for a Power to discover the breaking points by “test to destruction”.
@Jen: it’s kill the messenger day!
Turkey’s Erdogan Fires Statistics Chief After Record Inflation
Also, a song from a bunch of years ago: Kill The Messenger by John Wesley Harding