by Robert Carbery
President Trump has said on multiple occasions that he inherited an economic mess from his predecessor. The mainstream media fact checkers moved quickly to disprove him, pointing to the grossly misleading low unemployment rate as all the proof you need. While the current economy looks better on the surface compared to 2009, there are still many danger signs pointing to perhaps a second Great Recession coming much sooner than you think.
Just about all presidents discuss the direness of the economy in order to quickly claim credit for any uptick in growth, blaming the current state of affairs on the previous administration’s policies. While many think the chief executive has the ultimate power to steer our economy in the right direction, he or she can only do so much. But the blame game is useless. Let’s stick to the economic reality.
Early signs were positive for the Trump administration since taking office. Consumer confidence was up and job announcements were coming left and right as retail sales beat expectations. However, a quarter of tepid growth for the first three months of the year quickly put a damper on automatically revving the American economy back into high gear all the way to 3-4% GDP growth per year.
Those stating that Obama’s economy was fully recovered and we are doing just fine, ignore all of the glaring evidence pointing in the exact opposite direction. The Obama recovery was the second-slowest since the 1950s and many sections of the country have still not fully recovered. Some may not ever get back to where they were. This is another reason why Trump won.
The U.S. unemployment rate currently sits at 4.3%. But this number is meaningless as it does not include the underemployed or those who have dropped out of the workforce. The U6 unemployment rate, a better measure of the overall health of the labor force, is almost double the unemployment rate at 8.4%. In addition, the labor force participation rate, at 62.7%, is at an almost 40-year low.
Things are not what they seem if you simply watch your peachy cable news shows for your economic information.
Since the recovery started in June 2009, 14 million people have dropped out of the labor force. Will these formerly working men and women ever get back to work? The average length of unemployment doesn’t bode well for that happening since the average length of unemployment at 25 weeks today is three weeks longer than it was in mid-2009.
Incomes are a similarly bleak story. The overall median family income increased less than 2% over the last seven years, according to U.S. Census data. However, the poorest fifth of Americans actually saw their incomes decline over that same period of time. Keep voting for bigger government!
Our first African American president from a Midwest state did not do well for either of those constituencies. There were more blacks and Midwesterners living in poverty in 2015 than in 2009, according to the same Census data. What Obama did succeed at was growing the welfare state and getting poor Americans dependent on handouts from the government. 11 million more people are on food stamps today than in 2009.
And these scary numbers showing the mess Trump inherited do not even dig into the bursted bubble of U.S. retail, the bubble bursting at the seams that is the housing market, and the mountains of debt accumulated by Americans, not just the almost $20 trillion in national debt, but also the massive amounts of outstanding student loans ($1.3T), auto loans, and credit card debt.
Trump inherited a real economic predicament. Some call it a mess. Others call it a completely healthy economy. It’s actually hanging on by a thread. But there’s still plenty of potential for improvement. If we get back to work.
by Robert Carbery