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Trump's Economy: Much Ado About Nothing


Let’s take a moment to talk about the economy’s performance since Trump took office.

The New York Times and CNBC both have articles talking about Trump’s impact on the economy. First, the Times:

> > The first monthly jobs report to reflect the state of the economy during the Trump presidency [is ](®ion=top-news&WT.nav=top-news)[quite good](®ion=top-news&WT.nav=top-news). There’s not much to dislike about the 235,000 jobs added in February, nor an unemployment rate that ticked down to 4.7 percent, nor an average hourly earnings rise of 0.2 percent. > > > > And it comes on the heels of mostly good data across a range of indicators, from retail sales to industrial output to the number of people filing for jobless benefits. > > > > ... > > > > There is a straightforward case for President Trump’s having virtually nothing to do with the most recent economic statistics. While the newest jobs numbers reflect conditions from mid-Febuary, roughly three weeks into the Trump presidency, at that point he had not yet taken concrete actions that would have a direct impact on the economy. > > > > No changes to the tax code or federal spending had been enacted at that point. Even the executive orders that have had economic implications have been more about direction than concrete actions, such as [an order]( to find and eliminate regulations that may be outmoded. > > > > President Trump has snagged good headlines out of things like negotiating for Carrier to keep some jobs in the United States, but those deals are trivial in the scheme of a nation with 146 million jobs. > >


The problem: A falling birth rate and the aging baby-boom generation is slowing the growth of the job force. Without a steady influx of younger workers, the working-age population into the U.S will begin shrinking, putting a serious damper on economic growth. The math is fairly simple: It's difficult to create new jobs without workers to fill them. For now, the economic expansion that began after the Great Recession that ended in 2009 continues to employ more workers at a healthy clip. ... Though unauthorized workers represent a relatively small share of the overall American workforce, they are the fastest-growing segment, according to [a new Pew Research Center study]( Over the next two decades, as baby boomers leave the workforce they entered in droves in the 1960s, the growth of the labor force will slow to levels not seen in five decades. Among those born in the U.S., whose parents were also born in the U.S., the working-age population is expected to shrink by 8.2 million over the next two decades, according to Pew. That drop with will be partly offset by an increase of about 13.5 million working-age adults born in the U.S. to immigrant parents.

The irony is that Trump may stymie economic growth by cracking down on undocumented immigrants, as this will drag down the overall workforce. People who support crackdowns on undocumented workers tend to believe that the jobs those workers are doing will quickly be taken up by American citizens–but this is simply not the case. All it means is that jobs go unfilled, and work either doesn’t get done or it is added to the workload of people already doing those jobs.

The reported job numbers for early 2017 simply aren’t that impressive, either. The stock market rally that began once Trump won the election and which has continued since isn’t based on economic fundamentals, but investors happy about the prospect of having corporate regulations and taxes slashed. Those regulatory changes have not yet come to pass, however, so the market may well heavily correct should those changes not to come to pass or at least fail to live up to expectations.

Nevertheless, Trump supporters will continue to claim he is causing positive economic results. It is well-known that Presidential influence over economic performance is fairly limited, and that uncertainty tends to be the greatest wound our political system inflicts upon the financial world (see: the run-up to the election itself). Should Trump continue his erratic behavior–and there is every reason to believe he will–and should his promised boons to corporate America fail to materialize, the economy may indeed suffer heavily as it attempts to correct for the undelivered expectations of the Trump presidency. That means a lot of suffering for many Americans, too.