President Donald Trump cited the economy as a primary reason to
pull out of the Paris agreement on climate change on Thursday,
and also used the opportunity to tout the massive
strides the economy has made since he took over in January.
“Before we discuss the Paris Accord, I’d like to begin with
an update on our tremendous, absolutely tremendous economic
progress since Election Day on November 8th,” Trump said. “The
economy is starting to come back, and very, very rapidly.”
On Friday, the Bureau of Labor Statistics released
the May jobs report, one of the most important indicators of
whether the economy is growing “very, very rapidly” and it was
138,000 jobs were added to the US economy during the month, less
than the 180,000 expected by economists. Average hourly earnings
grew 2.5% year-over-year, lower than the 2.6% anticipated by
economists and still under pre-recession levels. Unemployment did
tick down to 4.3%, lower than the stable 4.4% expected.
likes to say he “inherited a mess” when he took office, but
four months into his presidency and despite proclamations of
rapid improvement the US, the economy still looks a lot like the
“mess” it was before Trump won.
Economic data is… fine
For one thing, the jobs report confirms that the labor is roughly
sticking with the trends that are well established over the past
few years: decent headline job growth, iffy wage growth, and low
labor force participation.
While there are some strong numbers on the unemployment front —
lowest black unemployment rate since 2000, lowest U-6
unemployment rate since November 2007, lowest unemployment for
people with less than a high school degree since 2006 — these are
continuations of long-holding downward trends and not a sudden
Andy Kiersz/Business Insider
Looking more broadly, US GDP growth in the first quarter of
Trump’s presidency was
humdrum at just 1.2% annualized growth. While there
are some seasonal factors that are weighing on the number and the
second quarter looks to be a bounce back, it isn’t as if the boom
times are suddenly back. The low and slow recovery of the past
seven years is still intact.
On more industry-specific levels, economic data is looking
similar to the Obama presidency. Data points from retail sales to
consumer spending to industrial production have stayed on track
with their pre-election trends.
Even the much touted consumer confidence numbers have come back
down to Earth a bit.
The University of Michigan’s consumer confidence index topped out
at its highest level in over a decade, but it’s been moving
sideways since November and isn’t drastically higher than it was
prior to the election. For instance, the final April 2017 reading
was only 1.1 points higher than the level in April 2015.
None of this is necessarily bad, in fact it shows that the
economy will continue to grow and may even have room to
accelerate, but not if it matches the night-and-day rhetoric of
Trump and his team.
But what about the stock market?
Another figure Trump and his surrogates like to draw attention to
is the recent record highs set in the stock market. Trump even
cited the “$3.3 trillion in stock market value to our
economy” during his Paris agreement speech on Thursday.
The only problem is that the stock market is not the economy.
On one level, as we’ve made mention of repeatedly, the
composition of the market is not reflective of economic
contributions or the industries where people are employed. For
instance, industrials are weighted much more heavily in most
stock indexes than the percentage of Americans they employ.
And on a more conceptual level, the market is also a
forward-looking measure of investors expectations for profit
growth at individual companies, not a referendum on the state of
the current economy.
To the degree that the market is pricing in Trump’s impact at
all, it is most likely for the possibility of a tax cut in the
future. If Trump fails to deliver that cut, the market may not
look so excellent. Additionally, it’s uncertain whether
Trump’s rough outline for a tax cut will even stimulate the
So if Trump wants to argue that the economy is booming compared
to the Obama years, the data has to show it and so far it