Reviewing Trump’s First Official Jobs Report

The January Jobs Report has arrived. It is the first economic report that includes Trump as the active president. While he was in charge for only part of the month, it’s still important to take a look at how his aggressive start at the job has impacted the economy so far. We no longer have to discuss the Trump bump. Now, it is a direct measure of the impact of his policies, and if you weren’t already aware, the early news is good news.

Jobs

Always the first place to start, is reviewing the number of jobs created. The report shows that the U.S. added a total of 227,000 new positions. That’s 50,000 more than the forecast of 175,000, which is a good start.

The jobs were spread across industries, with the biggest surprise being 46,000 new retail positions despite the end of holiday shopping. Financial activities and construction were other big players adding 32,000 and 36,000 jobs respectively. Food services added a healthy 30,000 jobs, and health care saw an increase of 18,000. Overall, the raw numbers of added jobs beat expectations and present a pleasant surprise.

Employment

There’s an interesting change that happened in tandem. Even though the net job gain was above expectation, unemployment rose from 4.7 to 4.8. This falls in line with the criticisms that have been directed at unemployment measures for the full second half of the Obama Administration, and it is highlighted by the fact that labor force participation rose by a significant amount for the first time in ages.

The number of Americans not in the labor force dropped from 95.1 million to 94.4 million, raising the participation rate to 62.9 percent. While this is still a far cry from the participation rate anyone wants to see, it shows that for the first time since the market crash eight years ago, individuals facing long-term unemployment are looking for work again.

It’s also why a quarter of a million jobs can be added to the market while unemployment rises. Working Americans finally believe that employment is possible again.

It’s also worth noting that 19 states incrementally increased minimum wage in January. When hikes come out incrementally, the months of increase usually have a muted impact on hiring, as the major effects are usually seen in anticipation to the raise, and the long-term effects will ripple out later. Despite that, beating employment forecasts can be seen as particularly impressive in the face of such wide-spread cost increase.

Earnings

The major downside of the jobs report is that earnings increases have been nearly stagnant. In January, average wages only increased by 3 cents, which yields an annual increase of just 2.5 percent. On top of that, the work week length was completely unchanged. It shows that the faith Trump has returned to markets has not been enough to push inflation so far.

Even though the average wage hasn’t risen, overall earnings are up in a big way. Full-time employment rose by 457,000 to a total of 124.7 million, and part-time work fell by 490,000 to 27.4 million. This shows a major shift change that Americans are returning to better overall employment, and it represents a major earnings increase that won’t be reflected in the jobs report. Overall, more Americans are working, and those jobs are trending toward full-time employment, and that is a very encouraging prospect.

Forecasts

There are a few things we can glean from all of these numbers. The first relates to the Fed. They elected not to raise rates in their first meeting of the year, and this suggests that they want to see more tangible inflation before moving forward with their proposed hikes.

This is good news for the economy at this point, as it will help businesses push forward with lower loan interests, and if the federal government begins rolling out promised infrastructure spending soon enough, it can capitalize on the lower interest rates and have a reduced impact on the national debt.

The other important takeaway is that Trump acting in his position as president has still not been the economically devastating pitfall that was predicted by the Left. Even the most staunch of Trump’s critics are beginning to resign themselves to the truth that the Trump Presidency will be much better for the economy than Obama ever was.

They’ll still hope for the worst, but every month that shows good news for the economy will make them more desperate, and they will attack increasingly minute aspects of his policies.

Regards,

Ethan Warrick
Editor
Wealth Authority


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