The July jobs report issued by the Bureau of Labor Statistics provided further evidence that America is now finally enjoying a real recovery from the steep recession of the financial crisis. Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate declined to 4.3 percent.
Under President Trump, the unemployment rate is lower now than it was at any time under Presidents Obama, Reagan or Kennedy. Indeed, the unemployment rate has been lower than today in only 23 of the 576 months since Jan. 1, 1970 — just 4 percent of that time.
The July report also showed that wages are rising again. Indeed, the report stated, over the past year, “Average hourly earnings for all employees on private, non-farm payrolls rose…by 2.5 percent.” That is a higher gain than those reported in the vast majority of jobs reports under President Obama.
This good news just further confirms Trump’s broader economic recovery. Last week, the stock market broke historic records, with the Dow eclipsing 22,000 on Tuesday. Real economic growth reached 2.6 percent in the second quarter. The Washington Times reported Aug. 1, “Corporate earnings for the second quarter are beating forecasts at the highest rate in at least nine years.”
The very steep recession following the financial crisis officially ended in June 2009. Historically, the worse the recession is, the stronger the recovery typically is. The economy grows faster than normal for a while to catch up to its long-term economic growth trendline, a pattern first noticed by Milton Friedman, the Nobel laureate economist. Based on that metric, the economy should have come out of the recession booming.
But to this day, over eight years later, that still has not happened. Real economic growth during the Obama years was stunted below 2 percent. Today, the American economy is still more than $2 trillion below its long term economic growth trendline.
The U.S. economy sustained a real rate of economic growth of 3.3 percent from 1945 to 1973 and 3.3 percent sustained real growth from 1982 to 2007. As Larry Kudlow wrote in National Review, “Following the Kennedy tax cuts, the economy averaged 5.2 percent yearly growth between 1963 and 1969.”
Kudlow added, “After the Reagan tax rates fully went into effect, alongside Paul Volcker’s conquering of inflation, the economy grew at 4.5 percent annually between 1982 and 1989.” In 1984, Reagan’s recovery roared forward by more than 6 percent.
What we are seeing now under Trump are the stirrings of a real recovery from the 2007-2009 financial crisis, which never happened under Obama.
This is because all of Obama's economic policies were anti-growth, the opposite of every economic policy pursued by Reagan. Trump is reversing all of Obama’s policies and restoring Reagan’s consistently pro-growth policies, including Trump's tax reform plan, his deregulatory policies — particularly for energy, banking and finance — and his cuts to federal spending.
While Trump has not been quick in getting these policies implemented, markets believe in them. Thus, people with money are investing, businesses are hiring and expanding and consumers are buying. The result is a robust recovery that Obama consistently failed to achieve.
Peter Ferrara served in the White House Office of Policy Development under President Reagan and as associate deputy attorney general of the United States under President George H.W. Bush. He is currently a senior fellow at the Heartland Institute, a conservative and libertarian public policy think tank. He's a senior policy adviser to the National Tax Limitation Foundation and principal and general counsel to the Raddington Group, an international economics consulting firm.
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