The first full monthly jobs report under President Donald Trump is in, and it’s a huge (yuuuge?) success.
According to the Bureau of Labor Statistics the US economy added 235,000 jobs in February, above economists’ expectations for a 197,000 job gain. Perhaps most encouragingly, the average hourly earnings for private-sector workers increased by six cents, which lifted the year-over-year increase to 2.8 percent.
Unsurprisingly, the media has largely ignored the positive momentum, instead opting to focus on President Trump’s dismissal of previous jobs reports. If anything, this simply shows they are not paying attention. Trump’s criticism was aimed almost exclusively at the unemployment rate, which was held up by the Obama Administration as evidence of their success.
“Unemployment rate only dropped because more people are out of labor force & have stopped looking for work,” Trump tweeted in 2012. “Not a real recovery, phony numbers.”
“Look again, you hear these phony jobs numbers?” Trump asked last year. “People that gave up looking for jobs? They are considered unemployed.”
President Trump was and is absolutely correct that the unemployment rate is a statistical fiction, a meaningless number that often dramatically understates the severity of the problems facing the jobs market. Trump believed that the best way to judge the nation’s true employment situation was to look at the U-6 rate, which, unlike the “official rate” looks at unemployed, underemployed and discouraged workers.
Using that metric, this jobs report shines. The civilian labor force grew by 340,000 people, meaning that Americans are becoming less discouraged about their job prospects and are actively looking for work, and the number not in the labor force dropped by 176,000. As a result, the civilian participation rate grew by a tenth of a point to the highest level in eight years. It also led to the U-6 rate falling by two-tenths of a percent to 9.2, the best since April 2007.
Even if we agree on a definition of what “success” looks like, how much credit does President Trump deserve? A lot, according to Jamie Dimon, CEO of J.P Morgan Chase & Co.
“If you look at the policy, forget the tweets, look at the people on the ground, they’re top professionals,” Dimon said. “Serious people, with deep knowledge and deep experience — and their mission is to have a growth agenda. And that agenda is reducing corporate taxes; starting to build infrastructure, which we desperately need; reducing some of the regulatory regime, which has probably held back growth.”
In short, Dimon argues, President Trump has restored a level of excitement to a market that was stuck in neutral and had seemingly convinced itself that this was the “new normal.”
“It seems like he’s woken up the animal spirits,” Dimon said Thursday in a Bloomberg interview. “Consumer confidence, small business confidence, business confidence all skyrocketed because it’s a growth agenda.”
The term “animal spirits,” perhaps ironically, was made famous by John Maynard Keynes.
“[A] large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic, “Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitive benefits multiplied by quantitative probabilities.”
In other words, President Trump is creating a sense of optimism that didn’t exist before, and those happy thoughts among investors and jobs-makers is enough to drive the economy forward. Inevitably, this era of good feelings will hit its expiration date, at which point Trump’s economic policies will be the gas for continued growth. In the meantime can’t we all just agree that more jobs and more people in the workforce is a good thing?