It’s only fair to consider both sides of an issue.
Every time a Republican crows that unemployment is at historic lows under President Trump, a Democrat brays that the credit is due to President Obama.
According to the Bureau of Labor Statistics, the national unemployment rate was 5 percent when Barack Obama took office in January 2009. It peaked at 10 percent in October of 2009 and then started to decrease. When President Obama left office in December 2016, the unemployment rate was 4.7 percent. When Donald Trump took office in January 2017, the unemployment rate was 4.8 percent. The unemployment rate for January 2018 was 4.1 percent.
It sure looks like Obama presided over the more impressive drop, if you don’t count the five percent it increased before it dropped 5.3 percent (which Democrats blame on his predecessor). Republicans point to the astronomical 10 percent unemployment rate as the unflattering measure of the man while Democrats tout his ability to pull an economy on life support from a 10 percent unemployment rate to down 4.7. In other words, each side sees what it wants to see.
Fortunately for the intellectually intrepid, there are other factors that provide a context for comparing unemployment rates: the stock market, wages, and business investment.
Obama inherited a plummeting stock market in January 2009 at around 8122 the day he took office. As he was preparing to leave office eight years later, the market was at 19,762. The increase wasn’t a straight line, but it was steady. When Donald J. Trump took office in January 2017, the market was at 19,732. Over the next 13 months, it broke 96 record closing highs on its way to peaking at 26,616, only to suffer the biggest point decline ever—1600—in a single trading day.
In a strange way, the sell-off was a backhanded compliment to how well the economy is doing. It’s doing so well that everyone is on inflation pins and needles waiting for the Fed to raise interest rates. It’s like the game of Hot Potato: no one wants to get left in the market after everyone else has left. But confidence in the market is still strong. Plenty of savvy investors saw the drop as a perfect time to buy—buy low, sell high—and stabilized the market decrease at a total 1175 point drop for the entire day. Two days later, the market closed at a reassuringly stable 24,893, still 5,000 points above Obama’s highest high.
Any American with a 401K knows the Trump administration has been good for the economy. The drops weren’t as sharp under Obama, but the gains weren’t as remarkable.
President Obama is rightly given credit for a modest raise in wages that had remained stagnant for years. President Trump is given credit for a better than expected wage growth. In each case, rising wages reflect employers competing for employees and paying higher wages to get them. The unemployment rate fell under Obama, but it has fallen far enough under President Trump that businesses are raising wages dramatically in order to compete for even scarcer resources (employees), Walmart raised its minimum wage to $11. Wells Fargo raised its minimum wage from $13.50 to $15.00.
If there were lots of bonuses given out during the Obama administration, they weren’t publicized very well, and you probably don’t know anyone who got one. Everyone has heard about the $1,000 Trump tax cut bonuses given out to large numbers of employees at AT&T, American Airlines, Boeing, and Disney. It is costing companies hundreds of millions of dollars to do so, but it is a small fraction of the billions they will save from the lower corporate tax rate. Accordingly, companies are expected to use the extra cash to buy back their own stock and increase shareholder dividends, which is a big reason the stock market has taken off.
Business hates uncertainty even more than stifling regulations. The only thing it knew for sure under Obama is that he was choking them with regulations. Now with a business-friendly president in the Oval Office, one who is lightening the heavy hand of business regulation, companies can actually operate. Many are falling all over themselves to invest. Apple announced it is investing $350 billion with a “b” dollars in a new facility, creating 20,000 jobs in the process. Walmart bought back four million dollars of company debt.
Finally, the economic mood may be the most compelling of all factors. How hopeful did you feel under President Obama that things were going well for you? Could you find meaningful work? When was the last time you’d had a raise? How was your 401K doing? I would argue that the economic mood during Obama was blah even if it was slowly improving.
If the economic recovery was slow and steady under Obama, why has it been so accelerated under Trump? Because Trump’s economy has heart. Obama’s economy was a dull and plodding accomplishment despite his best efforts to regulate it into submission and to punish the job creators. His idea was to go and get money from the one percent, which wouldn’t have made a drop in the bucket of our deficit. Obama wanted to kill the goose that laid the golden egg, get that egg, and punish that goose.
President Trump’s idea is to encourage companies to repatriate tax money by lowering the rates. Apple is repatriating $38 billion in corporate taxes, and that’s just this year. Other companies will be following suit. President Trump wants to make the goose’s nest optimal for laying lots and lots of golden eggs.
Yes, unemployment dropped dramatically during Obama’s administration, but in context, it’s not much to write home about. No, we don’t have the same amount of history under President Trump to compare with Obama’s accomplishments, but does anyone need to tell you that we’re open for business—ka ching—again?
Check your 401K.
Note: The job creators are vital, and it’s vital that we provide a safety net for our fellow citizens who are struggling, but it’s the middle class that makes our world go around. Check your 401K.
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