As a candidate, Trump dismissed the stock market boom as a mere “bubble”. His focus was on the labor market, which was a “disaster”. He would create lots of jobs.
Immediately after the election, there were a few good economic data points, and the Trump people argued that the economy was already improving under the influence of more positive expectations created by his victory. So let’s go with that assumption, and look at the economy in the 12 months since the election. Here is the rise in payroll employment over the past 12 months, as well as during the previous 4 years:
11/16 to 11/17: 2.071 million
11/15 to 11/16: 2.324 million
11/14 to 11/15: 2.729 million
11/13 to 11/14: 2.793 million
11/12 to 11/13: 2.499 million
So why has job growth slowed under Trump? After all, Trump claimed the “true” unemployment rate was 30% or 40%, so there’s obviously lots of labor market slack. Right?
Of course I’m being sarcastic. Both liberals and conservatives claimed there was lots of labor market slack, and they were both wrong. Liberals made that claim to justify expansionary monetary and fiscal policies, and conservatives wanted discredit the economic performance under Obama. In fact, we are nearing full employment. I expect one more decent year in 2018, and then job growth will become extremely slow beginning in 2019. RGDP growth will also slow in 2019. I say that because the tax cut will provide a modest boost to the economy in 2018, but not much after that.
Interestingly, this poor job growth occurred despite some very positive tailwinds:
1. Manufacturing employment actually picked up slightly, as the fracking boom resumed and lots of manufacturing jobs are related to that industry.
2. NGDP and RGDP growth has been a bit better in 2017.
3. There’s been a bit of deregulation.
Despite these factors, we are simply running out of bodies. Job growth will continue to slow sharply over the next few years, especially in 2019.
Other Trump promises that won’t be kept:
1. Repeal Obamacare.
2. Build the wall.
3. Build infrastructure.
4. Cut the top personal income tax rate from 43.4% to 25%. (Trump will increase it.)
5. Lock her up.
However Trump will succeed in continuing to move the GOP from being a party of economic/foreign policy/social conservatives, to a paranoid conspiracy theory mongering, fake news, anti-intellectual, pro coal, white nationalist party whose leadership endorses people who long for the days of slavery, want to ban Muslims from Congress and say gays should be locked up.
PS. Read this horrifying article about what they plan to do with capital gains taxes—increase the rate and make the system far more complex.