Maybe the motherf***** has done a few things right after all!
The replacement rate for job creation is about 140,000 per month, meaning that’s what you need to produce just to keep pace with the growth of the population. I’ve cautioned you when we get numbers like 160,000 or 170,000 that they’re really not as good as they sound.
When we top 200,000, now we’re starting to talk about something worthwhile.
But when we top 300,000 – more than doubling the replacement rate – that is simply phenomenal, especially when wages rise commensurate with the job creation rate. And in December 2018, all of that happened:
Nonfarm payrolls increased by 312,000 jobs in December, the largest gain since February and beat economists’ expectations of 177,000 jobs. Wages also rose, while the unemployment rate moved off a 49-year low, the Labor Department said.
The report allayed fears over slowing economic growth, while plans of a fresh round of U.S.-China trade talks on Jan. 7-8 also helped boost sentiment.
It’s not the most important detail – since that would be the real-life positive impact this has on so many people – but the funniest detail to me is how massively this beat “economists’ expectations.” What is the value of running to economists to find out their “expectations” when we can just wait and find out what really happens?
Especially when, as this demonstrates, they’re basically pulling wild guesses out of their asses.
But back to the performance of the economy itself: Just yesterday we were hearing fevered panic about a coming slowdown, mainly because the stock market is freaking out about the trade wars. Suddenly the job report comes in and it’s phenomenal, and suddenly the fears are allayed.
What were they based on in the first place? The stock market freaks out when the Fed chair throws up a little in his mouth. Predicting near-term economic growth by what these people do is going to make you look like an idiot.
None of this guarantees that GDP growth will be solid in Q4. It seems the media’s been trying to talk the economy down ever since the third quarter came in at 3.4 percent growth and they realized Trump’s policies were actually having a positive effect.
Holy s***, if this keeps up, he just might get re-elected! We can’t have that!
They did the same thing with George W. Bush. The media predictions of a coming slowdown were relentless until they became, at least in part, a self-fulfilling prophecy. Then again, the policies Bush was able to get through Congress – if not necessarily the ones he personally preferred – were not as pro-growth as the ones Congress passed and Trump signed in December 2017. Bush cut marginal tax rates twice, but he didn’t double the personal exemption and he didn’t slash the corporate tax rate like Trump did.
He also didn’t unleash domestic energy production, although God knows he and Dick Cheney tried. If you’re disappointed in the GOP Congress that failed to repeal ObamaCare, I feel your pain, but the Bill Frist/Dennis Hastert/Tom DeLay disaster of a decade ago gacked easy layups that might have prevented the 2008 mortgage market meltdown and perhaps even the Obama presidency.
If GDP growth over the next year or so exceeds conventional expectations, it will be because the usual forecasters fail to understand just how pro-growth Trump’s policies have been (with the exception of the trade nonsense), and just how much more this has set the stage for sustained robust growth.
Some of the December job growth was probably seasonal, but if that was the main impetus then you wouldn’t have also seen the wage growth. That’s the result of a tight job market that’s having to lure people back into the workforce with better pay, which is why the jump in the U3 unemployment rate to a mere 3.9 percent is actually a good thing. It reflects that people are re-entering the workforce, and we need that.
So this morning the stock market is back on the rise because the job numbers were so much better than expected, and at least for the moment, the panic is on hold. It’s hard to ignore the reality of sustained prosperity when you’re looking desperately for a reason to be freaked out.
But people are creative. They’ll come up with something.