Indeed, the economy has made major strides since the end of the Great Recession in 2009, and that improvement has continued – and even reinforced by certain parameters – during Trump’s 16 months in power. Unemployment rates among minorities are at or near all-time highs, openings are at an all-time high and there are more jobs available than there are unemployed.
Yet wage growth is subdued, productivity remains lukewarm, and expansion has averaged 2.4% year-over-year since Trump took office, well below 4.4%. from the 1950s and 1960s.
“If you want to go back to the golden years, I suggest you go back to a year like 1955,” said Robert Gordon, an economist at Northwestern University and author of “The Rise and Fall of American Growth”. Dwight D. Eisenhower was president that year. The post-World War II period up to 1972 “brought about sustained increases in living standards which are completely different from what we see today.”
For starters, labeling a single economic era as the greatest in history is subjective because there is no agreed upon measure.
Judging solely by gross domestic product, perhaps the easiest way to gauge a nation’s progress, the decades following World War II were the hottest in American history. Suppressed consumer demand, a real estate boom and a vibrant manufacturing sector have all melted into the golden age of the economy. In terms of GDP, the current pace of expansion pales in comparison.
That said, Trump appears to be focused on the labor market, which continues to strengthen. For the first time, there are more vacancies than unemployed, although this figure comes from data only going back to 2000. A longer-term estimate suggests that the jobless-to-opportunities ratio is at its highest low for nearly five decades.
Unemployment rates are also at or near their lowest on record for black, Asian and Hispanic workers – a fact that Trump has highlighted.
Yet the overall unemployment rate – 3.8% in May – has been lower in the past, falling below 3% during the 1950s. The time it takes for the unemployed to find work also remains high. And while wage growth has slowly accelerated, past expansions have seen much larger gains. This is true even after taking into account today’s modest inflation.
“If you’re a new data scientist or a PhD. economist, yes, this is a great time to look for a job, ”said Lawrence Katz, professor of economics at Harvard University who was the Department of Labor’s chief economist under the Clinton administration, when he was told. asked if this was the best time to look for work. “If you’re a janitor, a construction worker in some places – No. “
Katz noted that in the late 1960s and late 1990s, wage growth was booming for these ordinary employees. And in the 1960s, jobs put workers on the path to longer-term benefits and economic security – rarer today, in a world where unions and pensions are scarce.
Michael Bordo, professor of economics at Rutgers University and authority on monetary history, agrees with Katz on this point. The best economic time to judge by unemployment was the 1960s, he said. In terms of economic growth, these are the 1960s and 1990s.
As for the golden age, “we’re not going to get it back,” Bordo said. While new technologies could help spur growth, the peculiar conditions of the post-war boom are impossible to replicate. It is more realistic, he said, to aim for growth that reflects the 1980s and 1990s.
Gordon of Northwestern also doubts a return to the “best” economy is within reach.
“In everyday life, a smartphone cannot be compared to the liberation of women made possible by the invention of household appliances,” he said.
Herein lies the problem of declaring that today’s economy is – or is not – the “best” ever. Economic progress depends on long-term and hard-to-change trends, such as the size and growth of the workforce. Therefore, making comparisons over time is like judging pancakes against pancakes. With different amounts of key ingredients, results will vary.
In the United States, where an aging population has maintained labor force participation and birth rates have declined, demographics alone make the GDP numbers seen in previous decades hard to match.
The White House economics team appears to be aware of America’s temperate outlook – and optimistic within those more limited parameters.
“Virtually all economists” have said that 3% growth cannot be achieved, and “we are now entering the 3% zone – it is a huge achievement,” Larry Kudlow told reporters on Wednesday. senior economic adviser to Trump, when he was arrested by the president. the claim that the economy is the best ever. Progress in stimulating growth “in my opinion is just beginning,” he said.