What Trump said ...My commentary ...
A new chapter —
(APPLAUSE)
— of American greatness is now beginning. A new national pride is sweeping across our nation, and a new surge of optimism is placing impossible dreams firmly within our grasp. What we are witnessing today is the renewal of the American spirit.
That's an interesting spin on lowest approval ratings ever for a president''s first month. Or maybe he meant to say that a new surge of optimism is the impossible dream when so many Americans disapprove of your performance.
Dying industries will come roaring back to life ... Our terrible drug epidemic will slow down and ultimately stop, and our neglected inner cities will see a rebirth of hope, safety, and opportunity.
Trump continues to play the role of economic savior, promising to bring back the dead or dying. There's a little problem with this plan: manufacturing as a percentage of the American workforce has been steadily falling since about 1930. It's not a product of NAFTA or China joining the global economy. It's a product of our industrial economy becoming an information economy and of manual work being steadily automated. He's exaggerating inner cities' plight - rural America is shrinking faster than any downtown - but if he really wants to revive an area he won't do it with manufacturing and mining jobs.
Since my election, Ford, Fiat, Chrysler, General Motors, Sprint, Softbank, Lockheed, Wal Mart, and many others have announced they will invest billions and billions of dollars in the United States and will create tens of thousands of new American jobs.
For reference, each month the America economy creates (and destroys) millions of jobs. Millions. (The difference between the number created and the number destroyed gives the net number of jobs gained, which is typically between 100,000 to 300,000 during a healthy expansion, as we've had in the 6 years.) Making deals with companies that may add tens of thousands of new jobs is a rounding error in a typical month - much less in a 4 year term - in this delightfully dynamic economy.
The stock market has gained almost $3 trillion in value since the election on November 8, a record.
This is great. It also has pushed P/E ratios to a heady level that suggests it'll be tough to continue at this pace for another four years. Even so, this rise is rational: with tax cuts and deregulation, short-term profits should go up. It will take longer to find out what sort of trade deals he'll make and what that will do to the economy.
We have begun to drain the swamp of government corruption
Trump continues to make personal deals with foreign countries. The most suspicious example of this was China granting him a coveted and long-denied trademark just days after his win. This trademark will be worth millions to Trump.
We want all Americans to succeed, but that can’t happen in an environment of lawless chaos.
Lawless chaos? Violent crime has been steadily dropping since about 1980. Illegal immigration has been steadily dropping since at least the Great Recession. Trump is determined to take drastic measures to solve two imaginary problems: lawless chaos and a surge in illegal immigration. It's like a the father of a teenager cracking down on bed wetting, a problem that had disappeared about ten years earlier.
Not only has illegal immigration slowed in the last 8 years or so, immigrants are less likely to commit crimes than native born Americans, as can be see in this graph.
Tonight, as I outlined the next steps we must take as a country, we must honestly acknowledge the circumstances we inherited. 94 million Americans are out of the labor force.
The economy Trump inherited is in stark contrast to the one Obama inherited. 76 months in a row, the economy has created jobs; breaking the old record of 48 months by roughly 2.5 years. In the year before Obama took office, the economy lost 4.4 million jobs; in the year before Trump took office, it created 2.2 million jobs. Put differently, the economy created 6.6 million more jobs in the year before Trump took office than it did in the year before Obama did. So how can Trump make it sound like he's inherited economic carnage?
This 94 million out of the labor force number is one of the weirdest that Trump has cited. How does he arrive at this number he's repeatedly mentioned? He uses the labor force participation rate. This is a measure of folks not working or looking for work who are over the age of 16. If you are a 28 year old house husband or retired at the age of 71 or a 19 year old at university, you are counted as a non-participant. My 81 year old, retired mother is part of this 94 million. If you are over 16 and are not working or looking for a job, you are part of Trump's 94 million.
This 94 million out of the labor force number is one of the weirdest that Trump has cited. How does he arrive at this number he's repeatedly mentioned? He uses the labor force participation rate. This is a measure of folks not working or looking for work who are over the age of 16. If you are a 28 year old house husband or retired at the age of 71 or a 19 year old at university, you are counted as a non-participant. My 81 year old, retired mother is part of this 94 million. If you are over 16 and are not working or looking for a job, you are part of Trump's 94 million.
We have measures of the labor force participation rate that date back to January of 1948. That year, life expectancy for men was 64.6. Today life expectancy is 76.2. The percentage of people who are retired now is higher than it has ever been - in part because people are living longer and in part because people are so much more affluent than they were in 1948. This alone would drive down labor force participation rates. But to offset that, women have joined the workforce in larger numbers. These are just two of the demographic changes over time that have shaped this number since 1948. What is the net effect of these and other factors?
Between 1948 and 2017, labor force participation rate has averaged 62.9%. What is it as of January 2017? 62.9%. Since 1948, the rate has ranged from 58.1% to 67.3% but the labor force participation rate for our most recent month is exactly what it has averaged since we began measuring it. To say that it's a problem now is to say that it has been a problem since just after World War II. Funny that no one has mentioned it before Trump, much less used it as proof that they'd inherited an economy in terrible shape because by that measure, every president has inherited an economic mess.
When Trump says that 94 million Americans are out of the labor force, he's decrying the fact that young mothers, old retirees, the idle rich, the handicapped and others have chosen not to work- in roughly the same proportion as they have since the end of World War II nearly 70 years ago. But how else to make an unemployment rate of 4.7% (a rate one standard deviation below average) sound bad? To say that he's inherited an awful economy is like saying that nobody since Reagan won by a wider margin of electoral college victory; it's wrong unless you discount all the other data points.
Summary
Trump's speech promised bold solutions to the imaginary problems of labor force participation rates, illegal immigration rates, violent crime and a loss of manufacturing jobs. Labor force participation rates are exactly at their historic average, and violent crime and illegal immigration have been steadily trending downwards for decades. A dwindling number of manufacturing jobs is a sign of progress in the same way that a dwindling number of farming jobs was. During the 1800s the American economy transitioned from an agricultural to industrial economy; during the 1900s, it transitioned from an industrial economy to an information economy. These two transitions have meant a dwindling percentage of the workforce has been needed for farming and manufacturing. It's not a sign of economic apocalypse that we no longer have 90% of the labor force farming; it's a sign of progress.
Trump has consistently shown a disinterest in facts but even when he does pay attention to a current number he fails to put that within larger trends. It's tough to understand what should happen when you don't even understand what has happened. Trump's grasp on the situation is about as tenuous as his grasp on the facts.
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This from CBS news on the 94 million not in the labor force.
https://twitter.com/CBSEveningNews/status/83708532367910502814.6 million are students, 43.7 million are retired, and 28.4 million are disabled or out of work for family reasons (looking after a family member like a child or elderly parent).
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