MY ESOTERIC likes to think of himself as a bit of a polymath with degrees in Statistics, Accounting, Computer Science, & Operations Research
We Have A New President
So I will continue with this set of metrics to track how well or poorly President Joe Biden transitions America from the rather weak state it was left in by Donald Trump and the Covid-19 pandemic.
Final Trump Update
This is the final update for Trump by the Numbers. Most of the charts have his end of term data; a few still have the data still coming in.
Because of the pandemic, virtually all of the metrics we are considering went south. Because of the overall poor way Donald Trump handle the coronavirus, many of the results remain worse than they probably should. That said, in several important areas were in trouble before the pandemic hit while there were a few bright spots that remained, even through the pandemic.
We will discuss each.
How Do We Stand Today?
Below is what is called a stoplight chart. It is intended depict in one place an easy to read picture of the status of a complex set of data; in this case Trump's America. Beside each measure, e.g. GDP, are a pair of colored circles ... the stoplights.
Below is a stoplight chart for the end of President Obama's term of office. This is what the charts tell me about the state of America at that point in time. The colored circles represent the "goodness" of that measure. For example:
- Food Stamp Use is Yellow (poor). While food stamp use declined considerably after the Great Recession of 2008 during President Obama's term in office, it was (and still is) way above historic norms.
- On the other hand, the Unemployment Rate is Blue (great) because at 4.8%, the economy is near or at full employment and is below what is normal.
- Finally, the National Debt is Red (terrible) because, even though the huge increase in debt was the direct result of 1) the cumulative effect of President Bush's tax cuts and the cost of his wars, 2) automatic economic stabilization measures that kicked in with the recession, and 3) the measures President Obama was forced to take to avert a depression, it is nevertheless historically high.
You will see I take a slightly different approach when we get to President Trump's stoplight chart.
President Trump's Final Stoplight Chart
We use this management tool a little differently in assessing how President Trump is doing. Instead of looking at how he is doing overall at single points in time, we consider how he is doing relative to how President Obama did. Why this way? Because President Trump and his supporters have made it very clear in words and deeds that they are measuring themselves to Obama's legacy.
Consequently, I organized this chart thusly. There are two sets of stoplights. Both measure whether he is doing better or worse than President Obama for each metric. The one on the left depicts how things stand about ten months into President Trump's term. The right stoplight is how it is in December 2017. The difference between the two colors tells you where that particular attribute is heading. The totality of color changes (or lack thereof) gives you a good idea of how President Trump is doing overall when compared to President Obama's ending position.
For example, take the Dow Jones Industrial Average. I have it rated Blue because Trump is doing much better at the moment than where Obama left it. Likewise, GDP is rated Green because the trajectory of GDP growth has not changed very much between the two administrations. Auto sales are Yellow because they are a little worse than what Obama gave him. Finally, Uninsured Rates is Red because all the turmoil surrounding Obamacare has noticeably increased the number of uninsured Americans.
Stoplight Chart on Trump's America
A Little History
To put things in perspective, a little historical context is always helpful. This next series of charts provide a look at Public Debt, Debt to GDP ratio, GDP and Per Capita GDP over various periods of time starting with a look at the entire history of the United States.
The first set of charts provide a look at Public Debt as well as the more meaningful Public Debt to GDP Ratio. The reason for the second metric is that it is not very often that a raw number (Public Debt) has any meaning by itself. It is just a number such as the Right throwing around 20 Trillion Dollars as if that was a terrible thing. Well it may be or it may not be. And you won't know until you measure it against some other related metric(s); in this case GDP and Time.
Until you know the size of the economy can you gauge whether $20 trillion is large or small. Because GDP is also around $20 trillion then you can start getting the feeling that the current public debt is pretty big indeed, since it is around 100% of GDP (in other words, it would take the entire American economy to pay off what America owes to itself and others).
Even here, you still don't know if this is situation is "normal" or not until you see what it was in previous years. Again, you can see it is at an all time high (save for WW II). The final piece of context that is helpful is looking back in history at other periods where the Debt-GDP ration was this high and judge if the times were good or bad then. We can't do that here because this is a unique situation in a peace-time economy. So, my conclusion in this case is having a debt this high is not good for economic health.
Final Analysis For Trump
Donald Trump oversaw a massive increase in Public Debt during his four years in office as well as an historic increase in the Debt to GDP ratio at 130.8%. True, only once in modern American history has the Public Debt actually gone down in terms of constant dollars, that was at the end of President Clinton's term. But the increase in Public Debt under Trump didn't have to be so large.
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There are three reasons for this historic growth.
- the tax cut early in his term.
- the pandemic
- Trump's mishandling of the pandemic
The 2017 tax cut primarily impacted large corporations and the rich to very rich. As most tax cuts are, this one was touted to increase GDP over the long-term and therefore tax revenues to offset the reduced tax rates. As any student of history knows, this rarely is the case - and it wasn't here either. As often happens, tax revenues plummeted thereby pushing up Public Debt well above what it would otherwise have been. Because GDP growth stayed relatively flat as well, the Debt-GDP rapidly rose.
Not under Trump's control was the initial impact on the economy by the coronavirus pandemic. As would be expected, it caused a massive recession further driving down tax revenues as well as GDP while, at the same time, driving an historic increase in public assistance payments, adding greatly to the Public Debt.
Donald Trump's poor response to the pandemic has probably contributed to the size of the Public Debt. Trump purposefully 1) downplayed the dangerousness of the virus, 2) made war against the wearing of face masks, the best defense against transmitting the virus, and 3) poo-pawed the need for social distancing, the next best thing to reduce the transmission of disease. The result was a poorer response by the public to doing the necessary things to mitigate the spread of the virus. Consequently, in the early Summer and then again in late Fall and early Winter, case counts, hospitalizations, and death due to Covid exploded. The consequence was foreseeable - more people out of work and more need for assistance pushing up Public Debt even further.
President Biden Takes His Shot
Having federalized the response to Covid vaccination, the economy is able to return back to normal on a faster trajectory than what Donald Trump left us. One potential benefit to that is, at first blush, GDP is growing faster than the Debt which is leading to that tiny downturn in the Debt to GDP ration.
Unfortunately, the Debt itself must continue to grow as America digs its way out of the Covid Recession.
This next set of charts looks at the Debt and Debt-GDP ratio in more detail by taking shorter snapshots in time. Here, to add context, I show some major events that drove changes to public debt. Then, by looking at an even shorter time frame, we can analyze public debt in yet another way—by seeing how it changed from administration to administration and comparing it to the rhetoric of the day.
In that last regard, much has been made of how much President Obama has driven up public debt. Well, you can see from Chart PD-3, that is not really the case because after you get past the terrible effects of the Great 2008 Recession (Obama took office in 2009 and was able to have direct influence on the 2010 budgets and beyond), you see that Obama, at 2.7%, has the second lowest rate of debt growth of the four presidents before him. So when you hear the hyperbolic rhetoric on this subject, you now know what the truth is.
The Scariest Chart You Will Ever See
Chart POP-1 is a bombshell for anybody who cares about a growing American economy. It says that if something doesn't change regarding population growth then the future for sustained economic growth is bleak. And, that is not the hyperbole mentioned above.
It is a simple chart for sure, just one line heading south, but what a line it is!! You see, as I explain in other hubs, economic growth is intimately intertwined with population growth (plus productivity growth). In the mid- to long-term, economic (GDP) growth is basically equal to the population growth rate plus the productivity growth rate1 plus an error factor that reflects current pressures on the economy. It is no more complicated than that.
Yes, in the short-term other factors (the error term) hold sway which cause monthly, quarterly, and yearly variations in GDP; things like the business cycle and inflation. But after they run their course, what happens with population (creates demand) and productivity (ability to satisfy the demand) take over control.
Without getting into the nitty-gritty of why, what must happen to keep the population stable, not increasing or decreasing (like Russia is) is that, on average, each female must produce two offspring during her lifetime in order to replace her and the father. If that doesn't happen, then population (and therefore demand) must decrease over time. Consequently, in order to grow the population one of two things must happen (or a combination of the two); 1) more than two offspring must be produced and/or 2) immigrants (it doesn't make any difference which type) must come into the country. There is no other way.
Look at the note in the middle of the chart pointing to the line at about the 2009 point. It is in this period when native born births fell below the replacement level or 2.08 births per woman. Therefore, it was here when immigration became critical to a growing population because immigration is necessary to replace the babies that aren't being born in sufficient numbers. To put it bluntly, around 2009, the US population started falling. The only reason it is growing now is all the immigrants that arrive and stay in America. Yet that is exactly what President Trump and many other conservatives are trying to stop from happening.
The reason I introduced you to this concept is to keep everything else that follows in context.
1 Today that would be .72% plus 1.2% = 1.97% predicted annual long-term growth. Since the Great 2008 Recession the economy has grown at roughly 2%. For comparison, population growth for the 1990s was around 1.2% and productivity growth was 2.2%. So GDP growth should be around 3.4%. In fact, it was about 3.8%.
Population Growth Rate - The Key to Economic Growth.
The History of GDP
Let's look at Gross Domestic Product (GDP), it is explained a little later. But just let me say it is a 20,000 foot view of how well the economy is doing. If it is growing, the economy is good, if it is flat, then the economy is under-performing, and if it is decreasing, the economy is in recession. The first chart looks at the whole history of GDP, from 1794 to 2017. In this, and the charts that follow showing finer and finer detail of GDP, I suspect most of you are in for a shock.
The most popular myth held by our conservative friends is that the economy was much better, relatively speaking, than it is today. If you believe that, get ready to have your bubble burst. You see, included on each chart are the major recessions, depressions, and panics that have marred our growth and caused unimaginable suffering and hardship on all but the wealthiest Americans.
The bottom line is that after the Great Depression of 1929 and until the Great Recession of 2008, the quantity and severity of recessions were small by comparison to what came before them. Before 1929, it seems that every time you turned around, America was in another major economic downturn. It is rather "depressing" when you think how one side of the political spectrum paints what has been a pretty good run of prosperity from 1950 to 2007 and 2010 to 2019.
Of course this came to a screeching halt with the 2020 recession, a natural consequence of the pandemic.
Donald Trump made large promises about how well he was going to do vis-á-vis the GDP. At one point he promised -
“We're bringing it (the GDP) from 1 percent up to 4 percent. And I actually think we can go higher than 4 percent. I think you can go to 5 percent or 6 percent.”
Even now he is telling anybody who will listen he produced the best economy America has ever seen. Well, the fact is, and the charts below show it, he didn't. He didn't even come close. His only truthful claim is that his GDP growth was marginally better than President Obama's - which he panned as disastrously.
The reality is, the rate of GDP growth which Obama and Trump sustained is probably the best of all worlds. History shows us that the types of growth Trump and the Republicans wanted lead to boom-bust cycles with the "busts" being pretty disastrously. It can be empirically shown that annual GDP growth in the range of 2.5% to 3% lead to very long periods of good economic growth
Trump by the Numbers
The following set of charts and graphs will describe the ups and downs of Trump's America over the length of his term. He has made many promises regarding how well various sectors of the economy will do, e.g., huge increases in coal jobs.
What this hub is about then is presenting and discussing data that tells us how well he is reaching his goals. Almost all of the data comes from official government sources although a few things such as consumer sentiment come from non-government but nevertheless industry-trusted reports. The sources will be provided.
The charts and graphs will be organized in what I hope are logical groups, starting with Gross Domestic Product (GDP), a general measure of the health of the economy, Included with the GDP are other related measures that provide more insight.
Gross Domestic Product
The most common indicator of economic health is the Gross Domestic Product (GDP) and how it is changing over time. The GDP measures the value of all of the services and end products manufactured in the US. It may seem so, but not coincidentally, this is the same value of all of the wages and taxes paid plus profit earned in the US.
GDP is related to recessions (and depressions) in that the National Bureau of Economic Research (NBER) uses it to determine when the economy is in recession. As a rule-of-thumb if GDP goes negative for two quarters in a row, the economy is in a recession. So Chart GDP-1 is our first gross indicator of Trump's America because we have three quarters under Trump's leadership.
What do we see? Basically no change (therefore a Green stoplight) from the path President Obama charted although if the last two quarters continues (over 3% in both the 2nd and 3rd quarters), he may soon be outperforming Obama.
The next level of detail is look beneath the gross GDP numbers. The GDP is calculated by adding the value of:
- Consumer Spending
- Business Investment
- Government Spending
- Exports minus Imports (trade balance)
These components are do not necessarily work together. For the longest time, the trade balance has been negative, meaning it has a depressing effect on GDP. Much is made in today's rhetoric about how bad it is to have a negative trade balance. If fact, as you will see graphically, net trade plays almost no role in determining GDP because it accounts for roughly -3% of total GDP.
It should be a surprise to no one that Consumer Spending accounts for the lion's share of GDP, about 69%. What probably is surprising is that Government Spending is as important as Business Investment, about 17% each.1
It should be easy to tell from Chart GDP-2 below why President Obama's stimulus was needed. If you look at 2007 you should noticed that Consumer Spending and Business started declining while Government Spending and Net Exports improved. You might also notice that the increase in Government Spending (the Stimulus) is about equal to the decrease in Consumer Spending. That was the point of the stimulus, to replace depressed consumer spending with government spending until the consumer spending took off again.
What made this recession drag on so long wasn't President Obama's fiscal policy, but businesses deciding not to invest; in past recessions, business picked up pretty quickly. In this recession, it took consumer spending only 2 years to get back to pre-recession levels, it took business investment an astounding five years just to get back to 2008 levels. If I showed you a graph of corporate cash reserves, which were and still are huge, you would see the explanation of why business took so long to get back on track.
1 Of course, this busts another myth that government spending plays no part in economic growth.
The federal deficit is another common measure of how things are going. The deficit is simply the difference between how much money the government gets in and spends. If income exceeds spending, then the "deficit" is a surplus, a very rare occurrence (the last time was in 2000 under President Clinton). More often, spending exceeds income then it really is a deficit. To make up the difference, the government borrows money which is called the National Debt; which today exceeds $20 trillion, a historically high number.
Chart GDP-3 looks at the federal deficit through the Bush 43 and Obama administrations, plus the first three quarters of Trump's. This period of time is unique in the it shows a budget surplus and the effects from an economy that almost fell into a world-wide depression, the worst in history.
If you extend the timeline back to 1980 you will see that average deficit was about $300 million in 2009$. Prior to that it was running around $100 million.
The explanation for the huge spike in 2009-2010 is the 2008 Recession. Much of that spike is the result of automatic stabilization payments (e.g., unemployment benefits) that kick in when the economy tanks. The remainder comes from the Obama stimulus program that replaced depressed consumer spending with more government spending; it worked.
It is also of interest (Chart GDP-4), given today's political rhetoric, that using a little more meaningful metric, Deficit as a percentage of GDP, President Obama is doing quite well when compared to the conservative gold standard, President Reagan.
It was known that the deficit will increase starting in 2016, partly due to higher interest payments brought on by that spike. As you can see, they continue into Trump's administration. Most economists think that the 2018 GOP tax plan will sharply drive up the deficit beginning in 2019. Only time will tell.
Donald Trump foreseeably sealed the fate of manageable federal deficits when he signed the GOP tax cut into law. The promises that he and the GOP made predicting economic growth would far outstrip the loss in tax revenues were false - and history easily proves them to be false, but they claimed them anyway.
President Obama and Congress had managed to bring the deficit back under control after it exploded with the effort to stop America from falling into a deep depression in 2009. That said, it was on a predicted increase by the end of his term. Even so, it was still under control.
With the massive loss in tax revenue with the tax cut, it quickly began exploding again.
Dow Jones Industrial Average
The next chart, GDP - 3, is related to the previous GDP charts in that the outcome of a growing GDP is a growing stock Market as well as the reverse. The DOW is often considered a "leading" indicator because the stock market in general reflects investors "expectations" of how the economy will be doing sometime in the future.
That means if the stock market (as represented by the DJIA or DOW) is heading south for a significant period of times (or collapses in a short period) then the economy is probably going to get worse as well. Likewise, as in March 2009 after Obama announced his stimulus, the plummeting stock market reversed itself rather spectacularly simply based on the optimism generated by the stimulus.
What you see in this February 2018 GDP - 3 chart is a continuously growing stock market in concert with a GDP heading the same direction. With the election of Donald Trump, stock market growth accelerated based on his promise for huge corporate tax cuts1 (which became a reality at the end of 2017).
You will notice in this update is that there is a sharp decline. That may or may not be there the next time I renew this chart, but at the moment it represents the largest sell off in the market (numerically) in its history; 1175 points on Feb 5, 2018 and over 7% in the five days preceding that. Because this is a monthly chart (although I make changes throughout the month) we won't know until March whether this is the beginning of a trend or just a blip (a very big blip indeed).
It is now Dec 2018, and the market is definitely headed in the wrong direction. The two parallel lines represent the channel of prices established during the Obama administration. While spending most of the first two year of the Trump administration above that channel, it has now moved into the middle of it1 . Those light tiny lines about the high point is a technical indicator. The pattern that has been established (head and shoulders) is almost the same pattern we say before the 2008 stock market crash.
If stock prices continue to fall below the bottom of the channel, then chances are high there will be a major retreat to follow.
1 Which means this is where the market would be if it followed the pattern set up previously.
This was the metric Donald Trump loved to point to to show how well the economy is doing. While the market indices, including the Dow Jones, do give some insight into the overall economy, it is only one small part - and not the main one at that. That said, Trump can point to its performance with a little pride, but not in the overly-hyped way that Trump did.
In fact, if you extend the channel established by Obama's eight year run, you will find that the Dow, during Trump's four years spent most of its time at or above the "ceiling". That is good for sure, but is it enough. As it turns out, no it isn't. According to Barron's, Trump ranked 4th out of the last 10 presidents. He ranked behind Clinton, Obama, and Reagan.
We will consider two of these. One is Real Median Household Income and the other is Real Disposable Income: Per Capita. The former tracks gross income for the average household and the latter considers average per person disposable (after-tax) income.
They both give the reader an idea of the overall standard of living in America. The theory being, the greater the income, especially after-tax income, the more there is to spend on finer things in life.
This first chart looks at Median Household Income.
What is Real Disposable Income-Per Capita really mean (Chart INC - 2)? Let me offer a definition I found on-line that is much more understandable than any I could come up with. In part:
"Personal income in the U.S. consists of all income that is received by U.S. residents in a given year, originating from all sources. Thus personal income is the sum of wage and salary disbursements, other labor income, proprietor's income (rental income), dividend and interest income, and transfer payments to individuals (welfare, unemployment insurance, etc).
Disposable personal income is the portion of personal income that is left after personal taxes are subtracted, and thus is the amount of personal income available to people for consumption spending and saving.
Per capita disposable personal income is found by dividing a country's total disposable personal income by its population.
Finally, real per-capita disposable personal income is found by adjusting per-capita disposable personal income for inflation.
Changes in real per-capita disposable personal income over time indicates trend in a country's material standard of living. Real per-capita disposable income will usually rise when economic growth rates exceed population growth rates[, like it is in the US].
Real per-capita income tends to follow the business cycle, rising in the peaks and falling in the troughs. The greater percentage of real per-capita income in most countries is used for consumption spending rather than saving ...
All else equal, a rise in consumer confidence will tend to increase the percentage of real per-capita income that is allocated to consumption, and decrease the percentage allocated to saving."1
Another term you may see is "Discretionary Income". This is Disposable Income less all of the necessities of life are subtracted, e.g. rent, insurance, alimony, food, etc.2
So what is Chart INC - 2 currently telling us? First, look at each of the yellow triangles which represent a recession. In each case it appears growth in disposable income slowed or declined. Also notice that growth was somewhat better during Democratic administrations - until you get to President Obama's presidency. In 2012, disposable income growth goes into reverse for a quarter; this coincides with a marked slowdown in the economy in the same quarter. The other factor leading to what is an atypical growth record is that unlike all previous recession recoveries, increased GDP and job growth did NOT translate in to income growth for the working class. Instead, the upper class was the only income group to benefit from the growth in America's economy.
President Trump's first year record is on the low end of Republican administrations, but, since at first glance, it looks like growth might be flattening out, it remains to be seen if that can be maintained.
1 Courtesy of https://www.swlearning.com/economics/econ_data/percap_income/percap_income_definition.html ©2004 South-Western. All Rights Reserved
2 Since the government does not track what I think is a very important metric, one must rely on 3rd party sources. If you are interested try this one from Motley Fool
Another set of measures that tests a different segment of the economy is employment, or more specifically, unemployment numbers. These numbers represent where the rubber meets the road, people. People supply the demand and people supply the workforce to satisfy that demand. It would seem then, how well people are able to create demand becomes very important to the economy as a whole. And what do they have to have to satisfy their demand, a job of course. Therefore, employment and unemployment statistics come to front of the class.
Let's start with an overarching metric of how many work eligible adults are willing to work. This measure is called the Participation Rate (Chart EMP - 1), a number one side of the political debate tried to bash President Obama over the head with to show how poorly he was doing. Actually, as we will see, they were wrong.
The historical Participation Rate (PR) has quite a story to tell including how this nation thought about women. First, consider all of the yellow triangles, they mark the various recessions that have occurred since WW II.1 You should notice that the PR either flattens out or declines during most, but not all, recessions. Another thing that should be obvious is from 1948 until the late 1960s, the PR remained relatively constant and at, by today's standard, low. What happened in the early 1970s? Women joined the workforce (before 1948, they weren't even counted). More and more women joined which explains most of the increase.
But starting in 2000, other demographic changes (we are getting older folks) have taken over. Recent analysis has demonstrated that changes in demographics (gender, age, etc) are the main driving factors for the downward changes in PR and not the forces behind changes in unemployment.
2/9/19 - After two years into the Trump administration we can see that the upswing begun in the Obama administration has continued at about the same rate. Hence the Green Stoplight
The next chart, Chart EMP - 2, consists of three metrics, the Participation Rate, which we have already discussed, the Unemployment Rate, and the U-6 Rate. Next. let's consider what is thought of as an "alternative measure". Many people the "official" unemployment rate (U-3) doesn't tell the whole story, that it is missing many people who have stopped looking for work. That is what the U-6 does.
The U-6 adds to the official unemployment definition all marginally attached workers plus total employed part time for economic reasons. If you look at the two metrics, U-3 and U-6, in Chart EMP - 2 you should see that the two lines mimic each other, the only difference is one of magnitude. Eye-balling the chart would appear to show that the U-6 runs roughly 4 percentage points higher than the U-3, consistently over time. That is why it is sort of pointless to use both metrics since you can draw the same conclusions from each. That is why most people use only the U-3. Nevertheless, if you like the more inclusive U-6, it is there for your use.
What does the official (U-3) unemployment (UE) rate figure tell us? The first thing it tells us is that average unemployment, at least since Reagan, has run at about 5%, which most economists consider "full employment"1. We also see that as President Obama left office, the UE rate fell to lows seen in both the Clinton and Bush administrations. Since Trump took office, UE has fallen to 4.1% from.7%. Job growth, on the other hand, is still good but nevertheless somewhat lower than the previous administration.
2/9/2019 - After two years into the Trump administration, like the Participation Rate, the declines in both the official Unemployment Rate and the more inclusive U-6 continued the downward trend established under President Obama. But do notice, the broader U-6 index has ticked upwards recently. That is something to keep an eye on to see if the official UE rates grows as well.
I also added the multi-job holders. If that percentage goes up, that is a sign of weakness as people must hold more jobs to stay out of poverty.
(this may be more detail than you can bear)
For those who enjoy analytical pain, Chart EMP - 3 is right up your alley. It provides you a look at the trends of all of the measures that make up the employment picture.2 The percentages are the growth (or decline) in that measure. The ones in the center are for President Obama and the others are for President Trump.
Now, one needs definitions if one can understand what they are seeing, so here they are:
- Civilian Non-institutional Population - Individuals, 16 years or older who are not in the Armed Services or are not in institutions such as prisons, mental hospitals, or nursing homes, (not on Chart EMP - 3)
- Civilian Labor Force - Individuals, 16 years or older who are not in the Armed Services or are not in institutions such as prisons, mental hospitals, or nursing homes, who are employed or unemployed and actively seeking work.
- Employment Level - Persons in the Civilian Labor Force during the reference time period that did any work at all as paid employees; worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family.
- Full-Time (FT) - Persons who work 35 hours or more per week.
- Not in Labor Force - Persons in the Civilian Labor Force who are neither employed nor unemployed due to lack of desire or lack of availability (e.g. in school)
- Part-Time (PT) - Persons who work less than 35 hours per week.
- Willing (Marginally Attached) - Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Discouraged workers are a subset of the marginally attached.
- Discouraged - Persons not in the labor force who want and are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months), but who are not currently looking because they believe there are no jobs available or there are none for which they would qualify.
I know there are a lot of numbers on this very busy chart but the story is in each set of three horizontal numbers which represent each president's result for that measure. For example, the top line traces changes in the Civilian non-Institutional Population (CniP), i.e. the set of people, 16 and over, who could work if they wanted to. Also, it makes a good surrogate for population growth overall. We see that CnIP growth is slowly decreasing over time from 1.16%/yr during the Bush administration to 0.4%/yr in Trump's first year (that will probably grow some over the next three years).
That is not good news on two counts. First, it implies the overall population growth is slowing which, in turn, puts downward pressure on GDP growth. Second, using the same logic a slowing CnIP growth rate also suggests a couple of things; 1) inflation as employers vie for fewer employees and 2) less output if the labor pool for workers shrink too much.
The first numbers that reflect current and short-term economic health is what is happening to the labor pool (those people willing to work). You can see that the difference between the Bush and Obama administration reflects the fact that most of the decrease in Civilian Labor Force occurred right after Obama assumed office even though the causes for it happened months earlier. Trump's .55% increase results from inheriting a growing economy.
The same dynamic can be seen with the Employment Level, Full-Time Employment, and Not In Labor Force numbers. The Part-Time numbers, while looking a little different still reflect a declining and then improving economy. This includes the decrease in Part-Time Employment growth which reflects the switch from part-time to full-time.
Of interest is the bottom two measures, Marginally Employed (ME). Marginally employed persons are those who are Willing to work full-time but are working part-time for economic reasons (not shown) or are Discouraged but still looking (the latter two are subsets of ME). Now ME is acting as you would think it would, after the initial plunge into a deep recession, those figures are decreasing as the economy recovers.
But consider the fact that Discouraged workers are increasing during the first year of the Trump administration. That is something to watch as, in isolation, it is not a good sign for future economic growth. Why? Because it says the number of people who are unemployed but haven't found work in a while. While one year doesn't make a trend, it is in agreement with a metric we will consider next.
2/9/2019 - After two years into the Trump administration, as with the other metrics, things kept improving and continuing the trend set under President Obama.
1 Theoretically "full employment" is that point where employers start competing for labor and driving wages up.
2 These totals are not adjusted for population growth. So please keep in mind when considering Civilian Labor Force and Employment Level, some of the growth is simply due to an increasing population rather than changes in employment dynamics
Weeks Out of Work
There are two measures for how long people have been out of work. One is the "average" number of weeks people have unemployed and the "median" number of weeks out of work. A third metric, a more important one as it turns out, is the difference between those two numbers.
The Average is the sum of the total weeks out of work divided by the number of people out of work; 24.9 weeks at the end of 2017. The Median is the number of weeks where 50% of the people out of work have been so for less than that number and 50% have been out of work longer. At the end of 2017, the median is 10.6 weeks.
Our third metric is the difference between the average and median, which at the end of 2017 was 14.5 weeks. Why is this important? Because whether the difference is getting larger or smaller gives insight on whether employment is betting better or worse. If the median is larger than the average they are getting closer together then the employment picture is getting better because fewer and fewer people are spending long times out of work.
Obviously the opposite is true as well. And if you look carefully at the dashed line in Chart EMP-4 you will see a slight up-tick, or at least a flattening out in the difference. This would correspond to the increasing Discouraged worker number.
One up-tick does not make a trend, so we need to wait for two or three more months of data to come.
Since the January 2018 update, things have changed a little bit. While not indicating things are getting worse, it may be that things have stopped getting better. Notice that in Chart EMP - 4, the February numbers for less than 5 weeks and between 15 and 27 weeks out of work have flattened out or have a slight up-tick.
That implies people are starting to find it harder (or simply taking longer on purpose) to find jobs. This is confirmed with the next Chart, EMP - 5 where the difference (dashed line) has also flattened out a bit. At this point in time, these indicators aren't indicating much. But, if it continues into the March update, there will be more significance attached to them.
CHANGE IS HAPPENING - The first sign of weakness just appeared on Chart EMP - 5. For three months running, the average and the median weeks out of work have increased; one more month and you probably have a trend. This is backed up by the data behind Chart EMP - 4, but you can't see it yet.
NEW - Job Openings, Hires, and Separations
This new chart shows a history of job openings, hires, and separations since the last few years of the Bush 43 administration to now.
You always want to see hiring (the red line) greater than separations (the green line). That indicates growth, even if total job openings flattens out. It is easy to see what happened in 2008 and 2009 where this was not true. If separations exceed hires, even in one month, that is a major red flag.
There has been a lot of talk about how the current administration has done a much better job at job growth than the previous administration. This chart tells a different story - one where the current job growth is just a continuation of a pattern set in 2010.
Job openings (blue line) is a good proxy of 1) how business sees the future and 2) how well they are doing as a whole. We see that once President Obama stopped the downward spiral, by late 2009 job openings began to grow. The growth was steady until 2014 when it accelerated. Beginning in 2016, coinciding with the very volatile 2016 presidential election, the growth in job openings slowed down to a crawl. This lasted until after the GOP tax cut was passed when it accelerated once again.
Food Stamp Use
Hand-in-hand with unemployment is SNAP (Food Stamps) usage. It makes since that as unemployment grows, food stamp use will sooner or later also increase. The same is true when employment grows, food stamp use will ultimately decline.
The take-away is, of course, that if we see in CHART EMP - 6 food stamp use increasing then the economy is probably in trouble. If it is decreasing, then the economy is almost certainly recovering.
Because food stamps is a "lagging" indicator then the forces driving the observed changes are more than likely not going to change in the near future. If they do, such as the last data point in the chart below, then one needs to start paying closer attention to what's happening in the overall economy.
The next set of indicators measure different aspects of forces that drive economic activity or reflect what is going on.
Among other things President Trump has made his presidency about bringing back manufacturing which has been declining since 1998. In fact, it began increasing again under Obama in 2010. The upward trend appears to be continuing with Trump.
An increase in manufacturing jobs reflects an increase in higher paying jobs, which America sorely needs.
2/9/2019 - Note that the growth in manufacturing jobs slowed from 1.8% through last month down to 1.6% this month. Not a good sign - if it persists. I didn't change the Stoplight Color yet.
Consumer Confidence and Consumer Sentiment
Consumer Confidence is thought to be a great indicator of consumer expectations regarding the job market and job security. Consumer Sentiment is more related to consumer pocketbook issues. Together, they provide a pretty good picture of what Americans are thinking regarding spending.
And that is important because consumer spending is 69% of GDP. Any given measure generally means nothing in particular, but the trend does. Look at the transition between Clinton and Bush (the 2001 recession) and Bush and Obama (2008 recession) to see what I mean.
6/28/2019 - After climbing through most of the Obama administration, it flattened out shortly after Trump took office and has stayed at around the same level as in the best years of the Bush administration. Notice it is still well below that during the last years of Clinton.
Both Consumer Confidence and Consumer Sentiment stopped growing under Trump; Consumer Confidence immediately and consumer sentiment almost a year later. As it turns out Consumer Confidence reversed course from the get-go. I would guess Trump's constant trade war with the world kept people guessing what was going to happen next.
Auto sales is a good indicator of how the economy is doing. If they start declining, especially in domestic production, that portends bad times since so much of the economy is dependent on their sales.
2/9/2019 - After the auto bail-out, the market stabilized and grew nicely through the Obama administration. It did flatten out when the 2016 campaigns began and have stayed flat ever since.
6/28/19 - Enough time has passed to be able to say car sales flattened out soon after the beginning of the 2016 presidential campaign and did not improve after Trump was elected. Peel the onion back a bit and you'll see that domestic light truck sales have been increasing but was more than off-set by decreasing domestic auto sales and other types of vehicles.
It is easy to see from the chart below that auto sales underperformed for almost the entirety of Trump's four years. Trump's disastrously trade war had a lot to do with it.
The one bright spot for a couple of years were domestic light truck sales. They continued the increase that began in the Obama years, but then in mid-2019 they just sort of petered-out and never recovered.
Domestic autos (non-truck) never did recover their high-water mark in 2014.
Carbon Footprint in America
This final metric is the carbon footprint in America which means how much carbon dioxide and other greenhouse gases enter the atmosphere. Conservatives and President Trump think global warming is a hoax, especially that it is man-made. In the near future, like the next 20 or 25 years, atmospheric scientists don't see immediate impact on the worlds economy. But after that time the die will be cast and economic disaster will be unavoidable.
Right now, the carbon footprint is still following the downward path President Obama set. President Trump, however, has ordered the EPA to roll back all of Obama's efforts to reduce the amount of carbon dioxide being released.
Two years into the Trump anti-environment administration, America's carbon footprint, as one would expect, is rising rapidly. It should increase even further as he rolled-back President Obama's green house gas reduction program.
Donald Trump tried hard to screw this up, but he didn't have enough time in office to do a thorough job of it. He rolled back many regulations designed to reduce America's carbon footprint, but it is like turning a huge oil transport ship, it happens very slowly. There is no doubt he slowed down the improvement. Only time will tell if the measures he took will actually make things worse before President Biden's efforts take hold to undo the damage.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2017 Scott Belford