The U.S. Bureau of Labor Statistics released its December jobs report Friday morning, showing nonfarm employment was up by 312,000, stronger than analysts expected.
The impressive jobs number, along with the Fed signaling patience on rate hikes, shook the stock market loose from its doldrums, with the Dow posting a 747-point gain.
With the December jobs number, President Trump now has two full years of economic performance to compare with his predecessor, President Obama. The two biggest statistical standouts are:
Looking at jobs added over the 24 months through this December and comparing that with the last two years of the Obama Administration is illuminating—both for the pace of employment expansion in the late stage of a business cycle, as well as for the composition of the jobs added.
At first glance, the overall employment numbers look comparable, with a little more than 5 million net nonfarm jobs added in the last two years of the Obama Administration compared to more than 4.8 million jobs in the first two years of President Trump’s term.
But, recall that the official unemployment rate in January 2015 was 5.7%, close to what many economists thought at the time was full employment. Some of these economic experts warned that President Trump’s tax cut and reform would quickly overheat the labor market, causing a round of inflation with little long-term benefit to workers. Instead, millions of Americans rejoined the labor force, with the official unemployment rate declining to 3.9% by December 2018.
Stated in overall numbers, 8.9 million people who wanted work were out of work in January 2015, and that went down to 7.5 million people in the last full month of Obama’s presidency. This month, that number was further reduced to just under 6.3 million people.
The number of Americans working part-time for economic reasons—meaning, they would prefer to work full-time if they could—stood at 6.8 million in January 2015, declining to 5.6 million in December 2016 and even further to just over 4.6 million people in December 2018.
Looking at manufacturing, the government report noted that 32,000 jobs were added in December with 19,000 of the gain being in the durable goods component. In 2018, manufacturing employment increased by 284,000 with some three quarters of the gain over the year being in durable goods manufacturing, an indication that President’s Trump’s policies are likely causing a shift of manufacturing back to American soil.
This is remarkable due to the widespread belief that it wasn’t possible—President Obama himself said in June 2016 that manufacturing jobs “are just not going to come back,” and New York Times columnist and economist Paul Krugman claimed on November 25, 2016, “Nothing policy can do will bring back those lost jobs. The service sector is the future of work; but nobody wants to hear it.”
The tax cuts President Trump signed into law in December 2017 were no doubt key to the sustained rise in job growth. But, perhaps even more important for manufacturing, a sector of the economy typically subject to more government red tape than the service industry, have been the Trump Administration’s deregulatory efforts.
According to the federal government’s own rule-making tracking system, the Trump Administration has implemented 2.7 significant deregulatory actions for every one added through October of last year, for a net regulatory savings of $33 billion. As this is the federal government’s own accounting, the projected savings likely understate the real world effect, as new regulations along with regulatory uncertainty, act to dissuade investment and hiring.
The employment results are clear: in the last two years of President Obama’s administration, our elites declared manufacturing dead while government added six times the jobs the number of jobs our factories added; while in two years of President Trump’s economic policies, our factories have added five times more employees than government. This is the formula for a stronger, more prosperous America.