Noah Smith embraces the Trump narrative: "There’s no doubt that the U.S. economy is in a boom"

Here for Bloomberg.

After examining several indicators, which, however, are not unequivocal for their interpretation despite saying "no doubt", Noah Smith comes down on the side of improved sentiment as the cause of the current "boom".

On that we agree. There's a boom in sentiment.

The problem is, too many people are importing that improved sentiment into their reading of the data, and into their choice of the data.

For example, Smith focuses on job openings to unemployed, which is a tiny measure (6.66 million in June) of what's really going on in the labor market. But the broadest measures of unemployment still show 15.9 million unemployed, underemployed, and no longer counted in the labor force. There is still huge slack in the labor market, which is one reason why wages for the vast majority of workers are not rising like they would in a real economic boom (2.7% y/y in July vs. in the 4s in 2006/7).

Similarly Smith discusses the percent of population employed aged 25-54, but clearly misses that it's most definitely not "back to 2006 levels" as he claims (H1 2018 is at 79.2%, still below the 2006 average of 79.8% and also below the average of either half of 2006). The broadest measure of the percent employed, on the other hand, still shows a huge gap between now and the pre-Great Recession average when over 6 million more were employed than are at present (60.5% now vs. 62.9% then, on average).

The case is similar with domestic investment.

Smith chooses to highlight "Shares of gross domestic product: Gross private domestic investment: Fixed investment: Nonresidential (A008RE1Q156NBEA)" to show that "investment as a percentage of the economy is at about the level of the mid-2000s boom". But the current level in H1 2018 at 13.7% is also identical to H2 2014. Was that indicative of a boom? Did we blink and miss it? How about in H1 2008 when it was again at 13.7%? Was that indicative of a boom? If so, why did the economy then promptly crash in H2 2008?

A broader measure of domestic investment, however, "Shares of gross domestic product: Gross private domestic investment (A006RE1Q156NBEA)", shows us well off the 2006 peak and even the more recent 2015 level. Whatever we call what we have right now, the current 17.7% is still far below the 19.8% level of H1 2006, which itself failed to equal the boom level of the year 2000 (19.9%).

With all that cash unleashed by the tax reforms and sloshing around in the economy, one would think things would look a lot better than this, which simply shows that most of that money indeed went elsewhere.

GDP has been temporarily goosed by the tax reforms in concert with a fresh gusher of federal deficit spending. But those are one-offs. They will not, and cannot, be repeated over and over again in short succession.

We know what comes next.

At the end of 2017 we still had 14 million more on food stamps than at the pre-Great Recession average

16.5% of the U.S. population was on food stamps on average in 2017, versus 11% on average from 1973-2008.

In 2017 over 42 million received food help from the program, but only 28 million would have had the average receiving help returned to 11%.

In the first five months of 2018 the percentage receiving help has fallen to 15.4% on average, implying a smaller gap of about 11.6 million.

The trend is in the right direction, but we are hardly back to normal.

Priceless: Yale historian Timothy Snyder blames Democrats for Hillary's loss

Here, on May 1, 2017, in Historian Timothy Snyder: “It’s pretty much inevitable” that Trump will try to stage a coup and overthrow democracy:

 '"On Tyranny" is a suggestion of things that everyone can do. ... [T]he other lessons — such as supporting existing political and social institutions, supporting the truth and so on — those things will then come relatively easily if you can follow the first one, which is to get out of the drift, to recognize that this is the moment where you have to not behave as you did in October 2016.' 

Funny how he lets that little slap slip at the end of an interview about his fears. It is the great, unacknowledged truth of Election 2016.

The rest of it reminded me of myself in 2009.

When I saw how leftists started trashing Obama one year in to his presidency it dawned on me that the tyranny I had feared from an Obama presidency had been a misplaced fear. Then the stories of Obama's laziness started to surface, and the personal details about his penchant for watching sports on TV, traveling, fine dining and playing golf. The guy got captured by the trappings of the office. Only then was it clear that there was nothing existential to fear. And then the guy punted on Obamacare, letting the House and Senate duke it out, creating a grotesque. And after reelection, he actually made the Bush tax cuts permanent and fixed the AMT.

Wow. What a revolutionary!

If Snyder breathed into a paper bag for a minute or two, he might realize that Trump's first midterms are upon us and only now is Trump starting to realize what presidential power is all about. The thing is, it's way too late. He has already squandered his political capital in year one, failing at job one, which is to get the order of the agenda correct. This was partly the result of making lousy appointments across the board in the first place, many of whom have gone on to blow up like so many Clinton bimbo eruptions but without the sex. By generally being incompetent like any true outsider would be in Washington Trump was at a huge disadvantage from the start anyway. But the people who could have helped him didn't because Trump got elected in part by insulting them.

This presidency is already much like Obama's, a creation of the House and Senate, not of the president. Recourse to executive orders to get what you want but can't get the ordinary way is a sign of weakness, not strength. It shows that the master is the slave. 

Few presidents get three important things done. Trump has one major accomplishment but it wasn't the one people remember the fearless leader championing at every venue of 2015 and 2016. So far the corporate tax cut is not translating into unequivocal results for the people. As a percentage of civilian population, employment remains over 6 million behind the pre-Great Recession average.

"Hillary isn't president" is something to be truly grateful for, but sooner or later it will dawn on the Trumpists that Trump isn't either.

Liz Peek's talk radio echo chamber: Trump's already solved the jobs crisis

This morning on the Steve Gruber show.

This is the sort of hubris which precedes debacles, especially when the hubris isn't justified by the facts.

The difference between an employment population ratio at 60.5% today vs. 63% pre-Great Recession is in excess of 6 million jobs, or 120,000 votes in each and every one of the fifty states in the union. Trump won Pennsylvania, Michigan and Wisconsin by fewer than 80,000 votes total. Failure to expand employment decisively beyond current levels is courting disaster.

Hardly a time for gloating.

The biggest disappointment in today's GDP report was the collapse of private investment

Compared with the average from 2007-2017, the points contributed to real GDP in 2Q2018 by private investment plunged 128%. It was the only category which actually subtracted from real GDP (-0.06 vs. an average contribution of +0.211 from 2007-2017, which includes the subtractions of the Great Recession era).

This was awful, but predicted by just about everybody. The tax cuts were supposed to deliver investment. Instead, they delivered consumption, an orgy of consumption, relatively speaking. The contribution from personal consumption was up 127% compared with the prior eleven year average, some part of which is fueled by borrowing. Total consumer credit outstanding in May hit a new record $3.897 trillion.

And speaking of fuel, the biggest gainer percentage-wise was net exports (oil), its contribution up a whopping 1414% over the previous period average. That's great for the oil business, but consumers are paying over three bucks a gallon for gasoline today. A lot of the personal consumption increase (above) is going straight into the fuel tank.

That's a neat trick of GDP. Export a commodity needed at home, driving up the price which consumers pay, and then the government turns around and counts consumers' misfortune as a sign of a growing economy! Yeah! Reelect the president!

Finally we have the contribution from government expenditures and investment, also up in a huge way, 1056% over the previous period average contributed (which includes all of Obama's stimulus). We needed the big increase to defense spending, to be sure, but that's for maintaining the possibility of increased standards of living. It's not the same thing as an increased standard of living.

Cue the happy talk. Surely it's five o'clock somewhere.

Housing starts continue to improve but gradually: It's not a boom

The best that can be said is that the horrible Obama era is over. Housing starts continue to improve, but we have a long way to go before we recover the pre-Great Recession average.

Political reality in Michigan summer 2018

The left is still here, waiting to be roused.

Barack Obama 2008:  2,872,579

Barack Obama 2012:  2,564,569

Donald Trump 2016:  2,279,543

Hillary Clinton 2016: 2,268,839

While Hillary's deficit to Trump was just 10,704 votes, to Obama it was between 295,730 and 603,740 votes.

Somebody here in Michigan really disliked Hillary.

Who could it be?

Bernie Sanders 2016 Democrat primary: 598,943

Hillary Clinton 2016 Democrat primary: 581,775

Donald Trump 2016 Republican primary: 483,753

all other Republicans 2016 primary: 842,836

Trump admitted in December 2016 in remarks in Grand Rapids that "a bunch of people didn't show up" in November, which is the real reason he won here. Obviously a mix of Bernie supporters/black people couldn't bring themselves to vote for Hillary in the general.

But they didn't just go away.

Trump approval in Michigan in June 2018 is at 44%, disapproval at 52%. He was at 48/40 in January 2017. That growth of disapproval combined with erosion of approval looks problematic for Michigan Republicans in November.

Michigan's employment level, though much improved, still hasn't recovered to pre-Great Recession levels, and is flat to slightly declining in early 2018. GDP on the other hand is better than the pre-Great Recession period, but is flat in the mid-threes. These things argue for continued Republican governance, but cheerleaders for a Trump boom will encounter a disconnect with the actual experience of people. They are advised to cool it.

The headline writer at The Hill gets it wrong, but the article author gets it right

People returning to labor force in droves — a key step for the economy, says the headline, but the article says no such thing.

The story author makes many astute points, which the headline writer obviously doesn't understand.

The labor force is growing, but gradually, as is the percentage of the population actually working. We ought to have north of 62% working as was true before the Great Recession instead of 60% now, but the direction is up, if gradual.

This means we are NOT at full employment. People who dropped out are dropping back in, looking for work, and finding it, gradually.

This is dispelling the myth that the decline in the labor force was structural, and permanent. It isn't.

This also explains why wages aren't rising dramatically. Employers still have bodies to choose from as people who formerly sat on the sidelines get back in the game. Employers still do not have to pay dramatically higher wages to keep the employees they have. They still have employees to choose from.

In a nutshell, it's not a boom, but it is overall a return to the right direction.

Sorry Jonathon Trugman, one month does not a full-time story make

Here he is, without data:

"Yes, folks, things really are looking better for full-time employment." 

It's true that the percentage of the population working full-time in May 2018 is up, to 50.1%.

Unfortunately the average for the first five months of 2018 is only 49.3%, the same as for the whole of 2017. Despite the surge in May, the average indicates no progress over 2017, yet.

Full-time peaks every year in July or August, so we'll see what happens. But when all is said and done, I'm expecting the full year to average about 49.8%, up about a half point.

In any event, we're still down in the basement trying to climb back to 52.1%, the pre-Great Recession average. To do it, we'll need another 5.1 million jobs, right quick like. If using the averages, 7 million.

But there is no driver for such jobs in this country, because we threw out the old one: housing. The whole economy was based on housing in the post-war, and once the Baby Boom bankers and politicians got their grubby little hands on it under Clinton and Bush 43, they managed to screw that pooch right along with everything else they've touched. A bunch of spendthrifts and squanderers are we. 

The gap in full-time employment has closed by 1.8 million in the last year, but we're still 5.1 million behind the pre-Great Recession average

Full-time employment before the Great Recession averaged 52.1% of the civilian noninstitutional population over a 12-year period through 2008.

In 2017, the average was still 49.3%, meaning relative to the period before the Great Recession, 6.9 million fewer full-time jobs existed than could have, assuming a real jobs recovery to pre-recession conditions.

In May 2018, the actual percentage has risen to 50.1%. The difference between that and full-time at 52.1% is still 5.1 million full-time jobs.

Things are looking better, but we still haven't recovered from the appalling conditions which ensued upon the Great Recession, not by a long shot.

We still live in a shrunken economy.

President Trump used to think 223,000 jobs a month wasn't nearly good enough

Actually, to close the employment gap between today and pre-Great Recession America, we'd need 370,000 jobs a month for the next 50 months straight, four years.

Like that's going to happen.

Arbeit macht GDP: At root America's basic economic problems lie at every level in not working enough

There is no age tranche working up to its potential, especially not teenagers, but also not the college-aged, not the core 25 to 54 years, and now not even the over 55 crowd. The latter in fact has only been held up more or less by those over 65 ramping up their participation in the wake of The Great Recession.

It all starts with the phenomenon of "failure to launch" in the teenage years. Baby Boomers didn't simply have fewer children and work less. They had fewer children who also lacked a vigorous work ethic. And that now appears institutionalized in the children of the children as well. This has now rippled through the system, as can be seen in the increasingly later dates for peak average annual participation in the age tranche charts below (1979, 1987, 1997, 2012, and 2016-2017?). GDP will not improve without a cultural reestimation of work. And a return to work will not occur without a need to return, which can only mean one thing:

“from rice paddy to rice paddy in three generations.”

16 to 19

20 to 24

25 to 54

55 and over

65 and over (subset)

Trump has no jobs achievement, let alone an historic one

The idea that Trump has an historic jobs achievement is based on the increasingly meaningless unemployment rate, which notoriously doesn't count many people who are not working. The idea that "essentially every American who wants a job could find one" is rubbish. For the anecdotal evidence, I suggest you ask any of the millions of unemployed and underemployed non-management people over the age of 50, most of whom got their walking papers in the Great Recession because they made too much money in the opinion of management. If you are looking for the hidden, nefarious, recalcitrant forces of deflation in the American economy, look there.   

The federal government actually tracks everyone who wants a job but still doesn't have one. They presently number 5.1 million, well above the average low for the data series in 2000 at 4.4 million. But even this number fails to capture the real scope of current labor slack.

If we had a real jobs recovery going on, we'd have employment at pre-Great Recession levels. We don't. Total employed as a percentage of the population in April 2018 is at not quite 60.4%. Before the recession it averaged 63.2% over the previous twelve years. That latter rate would yield 162.6 million working in April 2018 instead of the 155.3 million we actually have.

It's that simple. We have the people. What we're missing is 7.3 million of them working.

Them's the facts, no matter what the cheerleaders for Trump keep shouting.

Maybe dropouts from the labor force were a cause of the Great Recession rather than a result

The high rate of dropping out of the labor force we've become accustomed to since the Great Recession actually predates it by a decade, suggesting that dropping out may be a cause of the Great Recession rather than a result of it. Continued slow growth of GDP since the Great Recession can also be explained by the absence of these inputs.

If it were a jobs boom we wouldn't STILL have a deficit of 6,437,680 jobs in February 2018

The difference between civilian employment at 60% of civilian non-institutional population in February 2018 and the 62.6% average before the Great Recession is 6,437,680 jobs.

Call me when Trump gets it up.

The broadest measures of unemployment in February 2018 have fallen below the average before the Great Recession

Hooah Jim Geraghty!

Here:

Government doesn’t louse up everything, but it sure louses up a lot of what it promises to deliver:

from the Big Dig to Healthcare.gov;

from letting veterans die waiting for health care to failing to prioritize the levees around New Orleans and funding other projects instead;

from 9/11 to the failure to see the housing bubble that precipitated the Great Recession;

from misconduct in the Secret Service to the IRS targeting conservative groups;

from lavish conferences at the General Services Administration to the Solyndra grants;

from the runaway costs of California’s high-speed-rail project to Operation Fast and Furious;

from the OPM breach to giving Hezbollah a pass on trafficking cocaine.

The federal government has an abysmal record of abusing the public’s trust, finances, and its own authority. Now some people want it to take on a bigger role? If you want to enact a massive overhaul of America’s economy and government to redistribute wealth, you first have to demonstrate that you can accomplish something smaller, like ensuring every veteran gets adequate care. Until then, if you want to live like a Norwegian, buy a plane ticket.

There is no jobs boom: Full-time in February 2018 is still 6 million behind where it ought to be

For the ten years before the Great Recession, full-time averaged 51.4% of civilian non-institutional population.

In February 2018, we're still down in the basement trying to climb our way out. After ten years! Currently just 49.1% have full-time jobs.

The pre-recession rate applied to the present population level would yield six million more working full-time than there really are. We should have 132 million working full-time. Instead we have 126 million.

There is no jobs boom, just more of the same slow recovery. At this rate it'll still take many more years for full-time to recover to pre-recession levels. The odds of a recession intervening first are high.

You blinked and missed the boom: The best January for full-time job growth since the Great Recession remains January 2015

Average total employment is up about 5.1 million since the Great Recession by age groups, but the net increase comes from those over 54