Trump's "Booming Economy" is Full of Holes
- Feb 11, 2020
- 8 min read
You see it everywhere; “The economy is doing great. Unemployment is the lowest its ever been. The Stock Market is booming.” Trump says it, his voters say it, pundits say it, really rich people say it. But….is it actually doing great? Do most of you FEEL like the economy is great right now? I don’t think you do, considering nearly half of you have ZERO dollars in savings.
It is true, however, that wages are actually rising above inflation, which is a rare occurrence in America, especially for lower class workers who haven’t seen wages this high since the 70’s:
In fact, if you separate out the lower income wage jobs from the rest, you’ll realize that they are seeing the biggest growth in overall wages.
“Evercore ISI economist Ernie Tedeschi calculates wages for the bottom third of workers have risen at a 4.1 percent annual pace over the past two years vs. 3.3 percent for the middle third and 3.6 percent for those at the top. (Keep in mind that inflation, at least according to the preferred measure of the Federal Reserve, is running about 1.5 percent.) Some other calculations show similarly strong gains for those at the bottom.”
Is it because of Trump’s masterful leadership, as he would have you believe? Did all that deregulating and tax cutting for the corporations and ultra rich really trickle down to the average worker, as Republicans claim they would? Spoiler alert: No, it didn’t.
“It appears that a lot of the windfall is going to rewarding corporate shareholders by way of stock buybacks, where companies repurchase their own shares from the marketplace and leave remaining shareholders with a bigger chunk of the company and, therefore, greater earnings per share.
Stock buyback announcements surpassed $1 trillion for the first time ever this year, according to the investment research firm TrimTabs. Apple, which had about $250 billion in unrepatriated cash pre-tax bill, in May announced a $100 billion stock buyback.”
“The Wall Street Journal in October pointed to various surveys suggesting most companies aren’t passing on their tax savings to employees. A survey of 152 companies by the recruitment firm Korn Ferry International found that 14 percent of companies were using their tax cuts to increase base salaries, and a poll of 1,500 companies from the consulting firm Mercer LLC found that 4 percent are putting their tax money toward paying employees.
An analysis from Just Capital of 145 publicly traded companies found that 6 percent of tax-related savings was going to workers, while 56 percent was going to shareholders.”
As many predicted, the Republican tax cut was just for the ultra rich and corporations to make more money by buying back stocks on themselves. Very little of that money made its way to workers. Lobbyists and special interests have been funneling money into Republican campaigns for years, and this was the final outcome that those donors demanded. Not tax breaks to help workers, but tax breaks to help the rich and fill their pockets.
It was Paul Ryan’s magnum opus to get the tax cut passed. That’s why he retired shortly after. Get out of the game while you’re on top and you can reap the benefits of a cushy job as a board member on Fox while Trump drags the Republican party to the depths of Hell. I’m sure that job and any other potential involvement in stock buybacks had absolutely nothing to do with him gouging the taxes for the rich and billion dollar corporations.
But, back to my original point. If Trump and the Republican’s tax breaks haven’t done much of any help to the average worker, why then are their wages increasing above inflation, for what seems the first time in decades? Because states have taken it upon themselves to increase their minimum wages, a policy that Democrats have been pushing for years now;
“More than 20 states increased their minimum wage pay for employees effective Jan. 1. Passed legislation, ballot measures or inflation adjustments were the reasons behind the increases.”
"If you're a minimum wage worker in America right now, on average, you're actually probably getting paid closer to $12 an hour," says economist Ernie Tedeschi of Evercore ISI. "That's what I call the effective minimum wage."
So, basically, the Republicans create huge tax breaks for the rich, bar any option for a federal minimum wage increase, and then when states start taking it into their own hands by enacting these Democratic policies and effectively changing the national average minimum wage which ACTUALLY ends up increases low wage job growth, Republicans take credit for it all. Sounds about right.
Still, unemployment is at record lows. That’s a sign of a healthy job market, right? That’s what Trump says;
“Breaking News: Unemployment Rate, at 3.5%, drops to a 50 YEAR LOW. Wow America, lets impeach your President (even though he did nothing wrong!).”
But of course, just looking at that number alone doesn’t really tell us everything about the economy. That number doesn’t tell us the TYPE of jobs that Americans are working, if they’re only working part time, if they’re underemployed, or if they’ve given up the job search altogether.
“However, if the state of the economy is so bad that you become depressed about losing your job, or your recent attempts at job searching have been so futile that you haven't attempted to get a new job in the last four weeks, you are no longer considered unemployed: you become "marginally attached" to the workforce or a "discouraged worker" and are no longer counted in the unemployment rate.
“Other people not considered part of the labor force include prisoners, people confined to nursing homes, members of the Armed Forces on active duty, homemakers, students and retired persons.”
“There are many problems with relying too heavily on the national unemployment rate as a meaningful indicator of the state of the economy and its workforce. Unfortunately, this often means that the true percentage of people who don't have jobs or aren't making enough money is often worse than the official unemployment rate suggests.”
However, you don’t have to take my word or my researched sources’ word for it. Even Trump agrees that the unemployment numbers are flawed at best:
“Unemployment rate only dropped because more people are out of labor force & have stopped looking for work. Not a real recovery, phony numbers”
"7.8% unemployment number is a complete fraud as evidenced by the jobless claims number released yesterday. Real unemployment is at least 15%”
“Unemployment is a totally phony number.”
Of course, all of these tweets about how flawed the unemployment figures are were from BEFORE he got elected. Once he was President, the flawed and phony unemployment figures suddenly became gospel and the true measure of a booming economy. If they were flawed and needing adjustment to the REAL figures, which Trump himself claimed at one point were as high as (laughably) 40%
(https://www.realclearpolitics.com/video/2015/09/28/trump_unemployment_rate_as_high_as_40.html), then wouldn’t they have had to rise to those levels once he was elected before going back down if he was fixing those “totally phony numbers”?
Even if the numbers aren’t as phony as Trump himself claims and unemployment is actually quite low, the type of jobs that are out there are a hugely important factor to consider.
Since the 2008 crash (of which the moderate regulations that Obama tried to put in place to keep Wall Street from doing it again have been severely weakened by Trump), many middle class jobs were lost and when the economy eventually bounced back, they were replaced with lower income and part time jobs.
“Since the crash, about 75% of new jobs have paid less than $50,000 a year, putting them just above the $45,000 annual middle-class threshold for a household….Most wage growth since 2009 has been concentrated in the extreme lows and highs.”
One of my favorite movies growing up was American Beauty. It really hasn’t aged well. But, not entirely due to the fact that Kevin Spacey played a middle aged man who seduced a teenage girl. There’s also other parts to the movie which really look like a window into a different time.
There’s a scene where after Spacey’s character quits his corporate job, he goes to a fast food restaurant. There, he applies to work for them as a menial fast food employee. This scene was entirely played for laughs at the time, because of how ridiculous it was for a middle aged man to apply for a fast food job. This is a job for teenagers for God sakes. This movie is only 21 years old, but seems like a different world and truly a different America entirely. Now it is common place to see middle aged men and women and even people close to or well past retirement age working these menial jobs at fast food restaurants, Wal Mart’s, etc just to make ends meet. It’s normalized and it shows us just have far our economy has shifted in barely two decades.
So, yea. When states take it in their own hands to enact Democratic policies like increasing the minimum wage, it affects the overall wages of the country a lot because MOST of those new jobs are lower income. Americans are working, sure, but the quality of those jobs has plummeted.
And then we finally reach the big boy in Trumps’ bag of “Booming Economy” tricks. The Almighty Stock Market. Sure, it’s doing well. Especially for him and his friends. But, I’m starting to realize that the stock market is basically just its own entity where rich people just bet on what other rich people will do with their money all day. Especially now that stock buybacks are so prevalent, the entire system is on a house of cards where corporations just take money and pile it back into themselves to give the perceived notion that they are growing, instead of actually investing that money in their infrastructure and, you know, new jobs and incomes for their workers.
The Stock Market is becoming less and less relevant to be used as a predictor for how the economy is truly doing for the average American. Only about half of American households admit to having any investment in stocks, and a large portion of those are simply through employer matched retirement and pension accounts. And, even with that many having some stake in the stock market, the insane levels of wealth inequality in this country appear to be much the same in the stock world:
“According to Goldman Sachs, stock ownership is extremely concentrated because of the growing wealth gap in the U.S., and thus the market’s performance affects households making up the wealthiest 1% of Americans much more significantly than the other 99%.”
“The wealthiest 0.1% and 1% of households now own about 17% and 50% of total household equities respectively, up significantly from 13% and 39% in the late 80s,” Daan Struyven, Goldman Sachs’s chief economist said in a note earlier this week."
So yes, the stock market is doing well. Of course Trump looks at that and thinks the economy is the same as the stock market. That’s all that affects his billions and his sycophants. Wage growth, job markets, minimum wages? He’s never earned a wage in his entire life. He hasn't the slightest idea what the concept of working a day at Wal Mart for the Federal Minimum Wage of 7.25 an hour is like.
This shallow surface level analysis is what we get for electing/crowning a conman I suppose. The way he’s trying to sell us the “booming economy” is like a used car salesman trying to convince us the car he’s selling isn’t powered by a bunch of squirrels under the hood and held together by gum and duct tape. Except we already bought it and are riding down the highway with it. The squirrels are banging away under the hood and the wheels are falling off, but we sit there and nod our heads in agreement that it's a good car. Let’s try not buying the car again from him again come November.
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