When Trump fails to improve the economy

I expect Trump to fail to deliver on his promise to improve the economy.  We are likely to see the same sort of performance that we saw with Obama, if not worse.  And now we know how Trump will deal with that failure.  But first a bit of data from the recent employment report:

Payrolls up 227,000, vs an average of 201,200 during the past 6 years.

Unemployment up from 4.7% to 4.8%.  It had been trending downwards.

Wages up 0.1%, vs. a trend rate of 0.2% in recent.

One number is better than the trend, and two are worse.  But that’s not what matters.  What matters is that none of the three key numbers are statistically significantly different from the recent trend.  Not even close.  This is essentially a typical Obama jobs report.

When Obama was President, Trump described those Obama jobs reports in almost apocalyptic terms.  There is economic “carnage” in America, the economy is horrible.  But now that Trump is President he describes an almost identical jobs report as great, and tells us that it shows his policies were already working via the expectations channel, even before he took office:

The White House took a victory lap on the jobs report, but it doesn’t really belong to Trump

So Trump’s plan is simple, redefine failure as success.

PS.  This is also typical:

President Trump’s heated rush to launch what he said would be a “major investigation” into voter fraud has cooled, leaving White House staff uncertain when it will come to pass or what shape it will take.

I guess someone told him the investigation would not turn up anywhere near the 3 million extra voters he needs to win the popular vote.

There is a very simple explanation of why voter fraud is rare.  It involves three parts:

1.  Voting is an altruistic act; you are very unlikely to impact the result.

2.  Voting fraud is evil.

3.  Evil people are selfish.

That’s also why I don’t worry much about allowing ex-cons to vote.  If you were the kinda guy who robs liquor stores, why the heck would you want to waste time voting, or even registering?  And why would an illegal alien risk being deported simply to vote.  I’m not saying it never happens, but let’s be realistic here.

PPS.  I know little or nothing about the legality of Trump’s recent immigration moves.  But I predict that Trump’s red hot rhetoric in the campaign will hurt him in the courts.  Judges know about his promises to ban Muslims.  They know about his racists comments about the American judge with a Spanish surname. They are likely to be biased against him, on hair trigger alert for abuses of government power.

You can say that’s not “fair” to Trump.  Yes, but then nothing about Trump has ever been based on “fairness”.  He’s a winning is everything, at any cost, kind of guy.



18 Responses to “When Trump fails to improve the economy”

  1. Gravatar of foosion foosion
    5. February 2017 at 09:46

    He’s promising massive tax cuts (mainly for the top brackets) and deregulation. Isn’t that supposed to energize the economy?

    Look what the promise of deregulation has done for the financial sector: https://pbs.twimg.com/media/C32c47qVYAAgguc.jpg

    Trade and immigration actions are a major risk. Goldman Sachs warns that the balance of risks “are less positively tilted than they appeared shortly after the election.” http://www.cnbc.com/2017/02/04/us-political-economic-risks-mounting-against-trumps-agenda-goldman-sachs-says.html

  2. Gravatar of ssumner ssumner
    5. February 2017 at 11:00

    Foosion, He’s promising some good things and some bad things. Let’s see what he delivers. Based on what I’ve seen so far, I’m not very optimistic.

  3. Gravatar of foosion foosion
    5. February 2017 at 12:52

    I’m extremely pessimistic, although our reasons may differ a bit.

    If you’re interested, here’s the full Goldman Sachs Q&A on Trump’s policy outlook http://www.zerohedge.com/news/2017-02-04/honeymoon-over-goldman-slams-trumps-economic-plan-no-longer-expects-border-tax

  4. Gravatar of d d
    5. February 2017 at 13:13

    what good things would that be? cutting corporate taxes only sounds good to executives who can then increase their own incomes.

  5. Gravatar of d d
    5. February 2017 at 13:17

    and all that we will accomplish is make it easier to make a profit. there wont be any more investment. but executive incomes will sky rocket (some more). no new jobs will get created. the 99% incomes will continue there downward slope

  6. Gravatar of Scott Freelander Scott Freelander
    5. February 2017 at 13:24

    Maybe Scott can correct me, but it doesn’t seem there’s much evidence that tax cuts for the wealthy increases economic growth much. That’s just based on casually looking at some data over the years. Maybe Greg Mankiw could convince me otherwise.

    It’s interesting that Republicans in Congress still seem very out of touch with their base. It seems their base doesn’t care about most of their agenda at all, and that’s where they could run into problems. Either they risk taking on Trump politically at times, or they sell out, in which case they may as well not say they’re conservative anyway. And, of course, their agenda is not particularly popular outside of their base either.

    Democrats received more votes in both the Presidential and Congressional races. Republicans haven’t seemed to learn yet that they earn many of their votes merely by attacking Democrats rather than developing any specific agenda many want to get behind. They are the party of the plutocrats, with some sprinkling of what most would consider libertarian extremism.

  7. Gravatar of ssumner ssumner
    5. February 2017 at 14:51

    d, I’m talking about tax reform, not “cutting” taxes”. Lower rates and fewer loopholes.

    Scott, I think taxes do affect growth, but I don’t expect anything Trump does to move the needle very much.

    For instance, one reason Europe is quite a bit poorer than the US is because they work less, That’s mostly due to higher explicit and implicit MTRs.

  8. Gravatar of dtoh dtoh
    5. February 2017 at 15:45


    We’ve already had the debate on the efficacy of tax changes for growth, and we disagree.

    Everyone lies about job numbers. “It’s their fault.” “I’m doing a great job.” “That number doesn’t matter.” Etc. This is nothing new to Trump.

    IMHO, the only interesting question is whether, when and what kind of tax changes we will see.

    And BTW – I agree that Trump’s rhetoric will hurt him with the courts (which in the case of immigration is a good thing.)

  9. Gravatar of Randomize Randomize
    6. February 2017 at 08:32

    I don’t care about the guy who robbed a liquor store voting because robbing liquor stores has no correlation with opinions on anything that would be on the ballot.

  10. Gravatar of morgan warstler morgan warstler
    6. February 2017 at 11:56


    “Morgan, You don’t seem to understand that Trump plans to keep the current immigration policy, except the H1-b program, where he’s going to crack down. In other words, exactly the opposite of what you want.”

    Are you keeping up with the announcements? I don’t think so:

    1) no welfare for immigrants. We can discuss current recipients and not making them leave, but but all that matters is future. This keeps MOST follow on family visas from happening next year. The door closes shut. We’re a Country Club! Just wife and kids.

    2) Employment Visas – Immediately killed are Tata/Wipro etc who deserve none anyway. And INCREASE total to basically “unlimited’ when they are worth $100K+ so that startups and US Ip tech plays Apple, FB, etc – we can all get whoever we find RIGHT AWAY that is WORTH the high salary. I can’t tell you how huge this is.

    3) Green card for foreign college graduates.

    4) Some Asylee/Refugees – but with both vetting AND taking steps to assimilate: women & children first, make men stay and fight, spread them out, so communities do not form, etc.

    CULTURAL TEST: “I love America, I AGREE women are Econ and legal equals to me, I understand gays are fine, and I do not believe my religion should be law of land.”

    NOTE that this policy basket does not in any way run into banning Muslims, and it has direct immediate short term benefits for low skill US natives, it does NO harm to US tech companies (who never had their heart n comprehensive reform anyway) AND it make assimilation to America, Trump voter America, far more likely.

    This is the announced being worked on stuff… it’s exactly what I have been predicting.

    So, is immigration ranks do not fall…

    Why would you dislike a clearly superior policy? It does no harm to Chinese people.

  11. Gravatar of ssumner ssumner
    6. February 2017 at 12:45

    dtoh, You said:

    “Everyone lies about job numbers.”

    No, Trump lies an entire order of magnitude more than any other major (presidential) American politician in my lifetime. 30% to 40% unemployment???? Most of the wiser pundits like George Will and David Brooks see Trump for what he is. For some reason some people have trouble seeing it.

    I think lots more than taxes will matter. Trade policy matters, immigration policy matters. Foreign policy matters, Health care policy matters. Budget deficits matter. Government spending matters.

    And most of all, character matters. The GOP made a pact with the devil, and now they are finding out what it’s like to have a leader who implies that America is the moral equal of Putin’s Russia, and who has loony alt right people in top government policymaking positions.

    Let’s hope the “so-called judges” keep him in check.

    Morgan, Let’s wait and see on immigration.

  12. Gravatar of Mads Lindstrøm Mads Lindstrøm
    6. February 2017 at 13:08

    “There is a very simple explanation of why voter fraud is rare. It involves three parts:

    1. Voting is an altruistic act; you are very unlikely to impact the result.

    2. Voting fraud is evil.

    3. Evil people are selfish.”

    Plenty, if not most, evil is done in the name of a higher good. If you doubt that, see communism in any country it has been tried. So yes, some will commit evil voter fraud, for the higher good of not letting the opponent win.

    Three million fraudulent votes do seem quite unlikely though.

  13. Gravatar of dtoh dtoh
    6. February 2017 at 22:44


    “No, Trump lies an entire order of magnitude more than any other major (presidential) American politician in my lifetime. 30% to 40% unemployment????”

    Stop playing dumb, you know he was not talking about U-3.

    Tell me what percentage of Americans are not employed. If you answer accurately, your number is a lot bigger than Trump’s. Does that make you a liar? I don’t think so.


    I think what you really wanted to say was “Yes, but Trump lies an order……”

    Seriously even John Hinckley and Robert DeNiro have taken credit for good job numbers.

  14. Gravatar of ssumner ssumner
    7. February 2017 at 18:25

    Mads, Not sure what your comment has to do with my post.

    dtoh, So your claim is that when people talk about “the unemployed” they are referring to people like full time college students, and housewives, and 95 year old ladies in nursing homes, and men in prison? In that case, then yes, Trump would be correct. Even more so if Trump included cats and dogs, which typically are not employed. The question is, “What do people mean by unemployment?”

    I do agree on your point about John Hinckley. I’d have to admit that Trump is no worse than Hinckley.

  15. Gravatar of dtoh dtoh
    7. February 2017 at 22:07

    Exactly my point. How can you state Trump is a liar if you don’t know what measure of unemployment he was referring to. Surely not cats and dogs….but if you look at the drop if LFPR, his numbers may not be far off…they certainly don’t rise to “a lie an order of magnitude worse than any other politician.”

    Let me ask you another question. If unlimited full times jobs were available at $500/hour, what impact would that have on employment?

    The point Trump was making (as you well understand) is that a narrow measurement of employment that ignores potential structural/supply side changes provides only a limited understanding of employment and unemployment.

  16. Gravatar of Mads Lindstrøm Mads Lindstrøm
    8. February 2017 at 04:51

    Scott, I point out an argument in the first PS is flawed. I literally quote the part of the PS I am taking issue with. I do not understand how I could make it any clearer.

  17. Gravatar of ssumner ssumner
    8. February 2017 at 13:31

    dtoh, There is no measure of unemployment where his claims are remotely plausible. It’s “fake news”. And I was being sarcastic about cats and dogs and 95 year olds, I thought that was obvious.

    You said:

    “The point Trump was making (as you well understand) is that a narrow measurement of employment that ignores potential structural/supply side changes provides only a limited understanding of employment and unemployment.”

    No he wasn’t, he’s far too stupid to make that sort of point.

    Mads, I don’t care what’s been done “in the name of a higher good”. That has no bearing on my claim. I don’t doubt that Mao’s atrocities were done in the name of a higher good, but I doubt Mao would have ever voted illegally—he was far too selfish.

  18. Gravatar of dtoh dtoh
    8. February 2017 at 14:07


    “No he wasn’t, he’s far too stupid to make that sort of point.”

    You do realize how silly that sounds?

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