Wait a Minute, Joe — Trump Rules Could Give Boom Five More Years

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Today’s jobs report gives us, at 266,000, the biggest miss in history. The entire economics profession, including me, expected around a million. Well, so it goes.

Stocks loved it — because it probably guarantees more free money forever. President Joe Biden sort of liked it because, he’s arguing, his stimulus plan is working, or at least needed.

“Today’s report,” Mr. Biden says, “just underscores, in my view, how vital the actions we’re taking are — checks to people who are hurting, support for small businesses, for child care and school reopening, support to help families put food on the table. Our efforts are starting to work, but the climb is steep and we still have a long way to go.”

But wait a minute, Joe. you just had the biggest jobs miss in history, nearly 800,000 lower than expected. That doesn’t sound so great for your stimulus plan.

And, of course, not for your tax plan, because you’re going to hike $4 trillion in taxes, which doesn’t sound like much of a plan if the job market is underperforming.

Then again, Mr. Biden argues that we need more stimulus in order to bail out the jobs market. Well, why stop at $4 trillion? Why not $6 trillion? And on top of current services budget spending, which is, I think, around $4 trillion, you could layer on another $10 trillion. All because today’s number was only 266,000.

Seems like a pretzel twist to me.

I fail to understand the logic. And never have. We’re going to pour cash into the economy to stimulate but then tax cash out of the economy, which is recessionary.

Someone in the West Wing should make up his mind. You want a boom or a bust? You can appreciate the conundrum.

Now putting all this high level policy talk aside, I happen to think today’s jobs report was basically a fluke. It doesn’t correlate with any other economic statistic — be it housing, manufacturing, services, the ISM report on business, trucking, business capital expenditures, huge profits.

There is a boom out there, and the jobs report missed it.

By the way, the boom is still being led by Trump rules — Operation Warp Speed vaccines, low taxes, minimal regulations, and energy independence. So far, Mr. Biden’s plan has not been enacted, except for the $1.9 trillion stimulus, which had a temporary bump up in March consumer spending.

Not much bang for the buck. Mr. Trump’s policies are already leading to higher productivity and real wages. If only they would be left in place,. If it isn’t broke, don’t fix it.

Here’s part of today’s fluke. Not-seasonally adjusted jobs were actually up more than a million. I don’t want to go into the weeds, but I’m just noting that the catastrophic pandemic contraction has screwed up all the seasons. So that’s another point.

Also, if you look under the hood of the 266,000, you will find that both worker wages and hours worked went up significantly over the past three months. Hourly wages went up 3.4% at an annual rate — pretty big.

The so-called worker income proxy, which is wages times hours worked, is up 8.4% annually over the past three months. That is a huge number. That is a boom number.

The biggest gainer in the report was leisure and hospitality, up 331,000, bigger than the whole total and for the first four months of the year, jobs have jumped 1.8 million, which suggests that if the Bidets would quit meddling, you could have 4 million or 5 million new jobs in 2021. That would be fabulous.

Now here’s a bad point – long-term unemployment duration, defined as out of work 27 weeks or longer, has not fallen this year. Overall unemployment has, although it ticked up in April. But the long-term unemployment rate is still totaling 4.2 million. It has not changed.

This problem can be directly traced to overly generous and overly long unemployment benefits. By the by, the National Federation of Independent Businesses reports 44% of firms are unable to fill open positions.

A friend of mine owns a string of movie theaters in Texas, and they are reopening, but he can’t find anybody who will work at those modest wages. In the beginning, I think it was a good idea to help people with unemployment assistance. Now, though, it’s a good idea taken way to far — costing the economy jobs and growth.

Florida’s governor, Ron DeSantis, has the right idea with an executive order that residents receiving unemployment benefits will be required to once again show proof they’re looking for a job.

That is exactly what the federal government should do, but Team Biden insists on a vast expansion of various welfare cash benefit programs that have stripped any work requirements of work fare. It may be the single worst policy.

Eleven other states have done or are planning to do the same as Florida. They include Michigan — believe it or not — and Pennsylvania — believe it or not — and pro-business states like North Carolina, Montana, Maine, and Kentucky.

The net net of all this jobs stuff is going to be politics, right? Some will argue it helps Mr. Biden’s package. Others will argue Mr. Biden’s package is failing. I’m personally glad jobs are rising. It’s good for the American workforce.

I’ll guess that next month, you’ll see a gigantic number, because this month’s was flukey. I’ll tell you this, though, waging war against investment, spending more and more money on income transfer programs with no work requirements, jacking up taxes on everything that moves, and more and more free money from the Fed is not a good policy mix.

Trump rules would keep this boom alive for another five years or so. Biden rules are going to throw a wet blanket over it.

________

Adapted from Mr. Kudlow’s broadcast on Fox News.


The New York Sun

© 2024 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

By continuing you agree to our Privacy Policy and Terms of Use