Record Job Growth Continues After Obama Leaves Trump a

Strong Economy

And despite the initial headlines about one-time bonuses paid by some companies to their employees in the immediate aftermath of the tax cut (followed soon thereafter by some companies - like AT&T - laying off workers, thereby gaining back the cost of those bonuses), most of the corporate windfall so far seems to have been used to buy back their own company stock. Which, of course, benefits large shareholders in those corporations who, again, are the GOP's well-to-do donors; it does not benefit the average guy or gal.

There also appears to be no impact on the economy yet, despite the marketing effort the GOP put into selling the tax cut legislation as a jobs bill. The biggest effect we've seen so far is the growing fear that the resulting increase to the federal debt during a period of full employment will result in inflation and cause the Federal Reserve to raise interest rates more rapidly than they otherwise would have.

Add in Mr. Trump's mishandling of the tariff issue in such a way that we're looking at a full-blown trade war, and it looks like the Democrats are going to have to ride to the economic rescue once again. Let's just hope the pain isn't as severe this time as it was following the onset of Mr. Bush's Great Recession in 2008.

We say that because the Trump administration and the GOP Congress have yet to do anything meaningful from an economic policy perspective (other than sending confusion and disarray into the healthcare sector) so the attempt on Donald's part to claim credit for continuation of the economy's job growth and of the rising stock market during his first seven months in office seems quite premature, even for him. Well, maybe not for him.

Most economists felt the slow but steady economic recovery of the past seven years showed no signs of slowing down and would be unaffected for some period of time by the change in administrations. In addition, corporate profits had been forecasted to continue rising and have, in fact, continued to rise. At the end of the day, profits are the key driver to stock market performance.

(image from nbc.com)

January 2017 - As President Obama prepares to turn over the White House to President-elect Trump, we are fortunate to be able to say that the U.S. economy is strong. Following the Great Recession left to him by the George W. Bush administration, the Democratic Party's fiscal stimulus measures, although not as large as many economists would have liked, in conjunction with the Federal Reserve's monetary stimulus, have brought about a steady economic recovery of almost seven years.

During that time, private sector job growth has increased for a record 83 consecutive months; unemployment has fallen from a high of 10.0% to a current 4.7%, a number that economists generally consider to be full employment; and, in a related statistic that economists and the Fed watch closely, December's average hourly earnings were up 2.9% over the comparable period in 2015, the largest increase since 2009.

Stock market indices, which are driven by economic growth and corporate profits, are up more than 2.5 times their Great Recession lows. Third quarter corporate profits surprised analysts, coming in ~4% higher than those of Q3-2015. Expectations had been in the 1-2% range; this surprise fueled a rise in the stock market that many pundits overlooked when attributing the stock market move to the November elections.

The Obama recovery has been so long-lasting that most Americans seem to have forgotten how dire our economic condition was when President Bush left the White House. Imagine what an even better economy we would have had if, during the past six years, the Republicans had supported Mr. Obama's infrastructure spending proposals. It will be interesting to see if the GOP's stated concerns about the national debt will cause them to ignore Mr. Trump's infrastructure proposals as well.

But have we really learned any economic lessons during the past eight years? Derivatives still are unregulated, Wall Street firms still are too big to fail, and President-elect Trump has changed his tax philosophy from a short-term "millionaires tax" designed to pay down the national debt to one of massive tax cuts for the wealthy, an ideology that has never proven to help the average Citizen, whether implemented either at a national or a state level.

Whatever happens going forward, though, we'll be here to keep you updated on the economic data and policies that affect your pocketbook and your well-being. Stay tuned.

UPDATE: December 2016 - In the last monthly jobs report issued before President Obama leaves office, the Bureau of Labor Statistics reported that 159,000 new jobs were created during December. November's job gains were revised upward by an additional 19,000 jobs over the number originally reported. For the year as a whole, the US economy added over 2 million jobs, high marks for any 12-month period.

The unemployment rate in December ticked upward slightly to 4.7%, reflecting an increase in the labor participation rate. December's job gains were led by the health care sector, which added 43,000 jobs, and restaurants/bars which added 30,000.

UPDATE: October 2016 - The final jobs report before this fall's elections is out and the U.S. economy added 161,000 jobs during October; the unemployment rate fell to 4.9%. September job growth was revised upward from 156,000 to 191,000.

In addition, the Labor Department reported that applications for unemployment benefits during the first week of October remained unchanged at 246,000. The average number of applications for the four week period ending that week fell to 249,250. Both of these numbers were the lowest since 1973 and the total number of Americans receiving benefits is the lowest since June of 2000.

UPDATE: September 2016 - Employers added a net 156,000 jobs in September, continuing the steady growth the U.S. economy has experienced for a record six and a half years now. The unemployment rate ticked upward to 5.0%, as the expanding economy continues to bring more Americans back into the work force.

The Federal Reserve surprised many people by not raising interest rates at their September Open Market Committee meeting. The strengthening labor market has some concerned that the economy could begin overheating. Three Committee members did vote to raise rates last month and the expectation now is that the Fed will indeed increase rates at their meeting in December.

(Graphs from the Bureau of Labor Statistics)

These results have led the financial markets to expect the Federal Reserve to raise interest rates slightly at their September Open Market Committee meeting. This action by the Fed would be another indication that the economy is strong, with neither recession nor inflation viewed as a threat in the near future.

UPDATE: July 2016 - Belying some of the campaign rhetoric you may have heard recently, the US economy is creating plenty of jobs, witness the 255,000 net new jobs created in July.

This number blew past the 180k consensus forecast and has people speculating whether economic growth has reached the point where the Federal Reserve will raise interest rates when they meet again in late September.

UPDATE: June 2016 - In a strong reversal from May's anemic numbers, the Labor Department reported a net gain of 287,000 jobs during June, significantly exceeding economists' projected gains of 180,000. Unemployment ticked upward to 4.9%, though, as more Americans entered the labor market, but that higher participation rate is viewed as another positive sign for the economy.

Sectors leading June's growth included leisure and hospitality (59k jobs), health care (58k jobs), and information (44k jobs).

UPDATE: May 2016 - May's 38,000 net job gain fell short of the projected 164,000 increase and, as you might expect, has raised concerns among some economists and glee among many Republicans. The unemployment rate fell to 4.7%, due primarily to a decrease in the number of Americans looking for work.

Federal Reserve Chairman Janet Yellen, however, pointed out that many areas of the economy continue to show strength: first-time filings for unemployment claims remain low, while consumer sentiment and spending are improving. Most economists are taking a wait and see attitude before considering May to be indicative of a trend.

Unfortunately, many Republicans were pleased by the lower job numbers, hoping they reflect a slowing economy, which may be a key requirement if the GOP is to win this fall's elections. Something definitely is wrong with a political party and their leaders if they feel their only chance of succeeding is to root for bad economic news that will hurt many Americans.

UPDATE: April 2016 - US job growth slowed a bit in April as the net number of new jobs grew by a lower than expected 160,000. Hourly and weekly wages moved higher, however, reflecting an annualized growth rate of 2.5%. Unemployment held steady at 5.0%.

UPDATE: March 2016 - March recorded a jobs increase of 215,000 with retail, construction, and healthcare leading the way. The unemployment number rose slightly, returning to 5.0%, as more workers returned to the labor force, encouraged by the growing economy.

UPDATE: December 2015 - The US economy added 295,000 jobs in December, significantly exceeding the 211,000 consensus expectation. This brought total job growth for 2015 to 2.65 million, the second largest annual increase (after 2014) since 1999, during the Clinton boom years.