Politics Of The Employment Report

Today’s nonfarm payrolls miss,  134k total jobs created in September, sealed the deal on the job creation political debate before the November midterms.   That is all things being equal — during President Trump’s first 20 employment reports versus President Obama’s last 20 — the Trump economy created 347k fewer total nonfarm payroll jobs, and 137k fewer private sector jobs, than President Obama’s economy.

The differential will move even more against President Trump when October nonfarm payrolls are reported, the Friday before the election, as the May 2015 326k jobs comp will be a bar too high to conquer.

These are the facts, spin them as you wish.

On the eve of the midterm elections it is likely that the Democrats will be able to argue that President Obama’s economy created 500k more jobs than President Trump’s economy over a similar period.   Reality clashes with virtual reality and bombastic rhetoric.

Perspective

However,  all things are never equal.  The Trump economy is running up against labor constraints with shortages breaking out almost everywhere, which is reflected in today’s 3.7 percent unemployment rate print, a 49-year low.   It’s difficult to create the marginal job on this side of the inelastic labor supply curve.

Data should always be placed in the proper context.  But, hey, we are talking politics here,  and, “politics ain’t beanbag,” folks.

Other Notables 

• The shrinking labor supply is illustrated in the inflation differentials during the two periods –  4.14 percent under Trump, and 2.12 percent during Obama’s last 20 months in office.
• Trump’s nominal Average Hourly Earnings are running about 70 bps higher than Obama
• Real Average Hourly Earnings under Trump is about 1.3 percent lower than during President Obama’s last 20 employment reports
• Real GDP growth under Trump is almost double President Obama’s last six quarters in office, but not reflected in the overall labor market, which reflects the economy continues to reward capital disproportionate to labor
• Manufacturing jobs have recovered smartly during President Trump first 20 months, much of it due to the increase in oil prices, especially in the mining sector
• Job creation in the government sector, which, on average, generates higher income paying jobs than the private sector, is much lower under President Trump