The Bureau of Labor Statistics released the February jobs report last week that showed 273,000 jobs added in February. This shattered the experts’ predictions that were expecting 175,000. At the same time the BLS updated January and Decembers numbers to reflect 85,000 more jobs than previously reported.
These revisions are an interesting sidelight of the business of reporting labor numbers. The initial numbers due reflect some incompleteness in the reporting so the updates are always instructive. During the Obama administration there were updates on both sides of the ledger. That is, a few months saw increases. Most saw decreases. During the Trump administration the updates have always shown underreporting during the initial release of the numbers. I wonder why that is.
Main Street is doing very well. The tumult of the stock market (Wall Street) due to the coronavirus (COVID-19) has not had a significant effect on the Main Street economy. The job market is healthy as more people return to the labor force. Wages continue to rise (3% year over year) while inflation remains low. This means more real money in people’s hands. And all of this is happening before the full impacts of the trade deals kick in.
Productivity increased in the fourth quarter (1.2%) while production output went up 2.4%. In addition, hours worked increased.
It is clear that since PDJT took office and began hacking away at big government, the economy has stepped on the gas. This does not appear to be a bubble economy like we saw during the Obama administration when the Fed lowered interest rates to zero. Higher productivity aligning with GDP increases means the current GDP growth is sustainable and Main Street has less to fear from a volatile Wall Street.
Another aspect of the sustainable economy is the fact that the Southern border is no longer a sieve. This is reducing the flow of unskilled labor into the country. Such additions to the labor pool were forcing wages down.
We don’t know what COVID-19 will mean for the economy. And the media are trying to scare the heck out of people hoping to slow the economy so that a Democratic Socialist (Joe Biden) or a Communist (Bernie Sanders) might win the election in November.
Regardless, the economy will continue to do well (and recover if necessary), if we continue to stick with what works (less government regulation, less government spending, lower taxes) and avoid what doesn’t work (top down control, government intervention, out-of-control spending). I guess that is the “magic wand” that President Obama referred to during the 2016 campaign.
It’s too bad he did not know that a “magic wand” existed. Eight terrible years of economic malaise could have been avoided.
Another leading indicator for the economy is the amount of truck traffic on the roads. And it has not slowed down. There are an incredible number of trucks out on the interstates every day.
All in all, the economy continues to be great.