Trump's Economy

[Ironduke]

DOR,

In my original post, which I split into two to separately address comments from Red Team and surfgun, I mentioned:

• wage earners
• hourly rates
• in the productive sector
• in the private sector

Does your graph accurately display income growth for such workers?

The definitions of what's working or middle-class may be imprecise (apologies for not being an economist), but terms such as wage earner, hourly rates, productive sector, private sector, these aren't imprecise.

I didn't move the goalposts, and haven't changed the definitions.

In that context, is this graph accurate, or not?

Now, I’ll admit that I posted a link to a graph that clearly shows steadily rising real disposable per capita incomes among all US residents, and not just the private sector. Fortunately for me, the difference is so close to meaningless that my graph proves my point (which is why I posted it).

So it's meaningless to you - but not meaningless to wage earners in the private sector. Not meaningless to me. Try living a year in the life of a what should be a W2 wage earner misclassified as a 1099, who is on the hook for everything and getting squeezed from both ends. Where getting strep throat means a trip down to PetCo for amoxicillin. Where being let go for a several week period at your job, before being brought back on, means borrowing money you set aside for your quarterly IRS payroll tax payments that are coming due, just to survive, because you're ineligible for unemployment benefits.

I'm sorry you're offended by something you may have misunderstood, out of context, due to imprecise language from this non-economist, but I invite you to spend some time living in our reality.

[Albany Rifles]

Ironduke,

As a lazy government employee, let me roll out a bit on the compensation discussion....at least from my foxhole.

After I left active duty I became a defense contractor for over a decade.

I was free to buy stocks and place my 401(k) investments into anything I wanted to.

When I converted to civil service, I took a $15,000 a year pay cut. One of the reasons I was willing to do that was for the generous benefit package...it is part of the overall compensation. I have an MA in History, an MBA & a Masters in Acquisition Logistics. I am Level 3 certified in 2 separate fields. I manage a workforce of 57 personnel and am in charge of the sustainment of the Army's enterprise information system used for a major commodity of supply worldwide. Compared to my peers in civilian life who have similar levels of education, responsibility and experience (I'm 60 and been at it since I was 22) I am paid around $40-$50,000 less than they are (for this metropolitan area).

But I am okay with that because a) the compensation package you mention makes up some of that gap to me, and b) I take the Service part of Civil Service seriously. I am serving the Nation. I had to swear an oath to take this position. So as Astralis says, be careful how you wield that brush.

[Ironduke]

I apologize for the language I used with regards to the "gravy train". I never meant to paint you or anyone else as lazy. Many federal workers and contractors are what I would consider overcompensated, and I do believe there is a Beltway Bubble effect where many are out of touch with broader trends in the private sector. I don't believe this is personally the case with yourself or astralis.

[snapper]

It's also true that in some countries (the UK for example) there has been a civil service pay freeze since 2010.

[Ironduke]

...and I just walked away from my should-be W2 job, misclassified as 1099. Or, at least the contract as it was offered, which was being renewed weekly on an ongoing basis.

It was time to quit my bitching, walk the walk, and do something about it. I asked a very modest pay increase, so I could offset a small portion of excess taxes and employment fees. My counter-offer was rejected, so I counter-offered again, then was ignored, but not rejected. Things hung like that for two days. I then withdrew my counter-offer, rejected the contract, and thanked them for their consideration. Luckily, I have other work as a fallback.

I have to give credit to the IRS. At least they have the honesty to tell you when the conditions of your employment are crap, in the form of a tax bill for both you and your employer's share of the payroll taxes.

[snapper]

I would add that in Europe the healthcare benefits for being a Civil Servant of any sort are of course irrelevant compared to those working for themselves or in some private business.

[astralis]

going back to the Trump economy: i'm curious what all the hard-money people who thought we were going into hyperinflation back in 2011 think now.

with a President openly calling for soft monetary policy, literally trying to intimidate the Fed and staff it with his flunkies...all while pursuing a highly stimulative fiscal policy at the same time. despite a roaring economy and full employment.

somehow all that talk of a devalued currency and Greek bankruptcy and fake Fed numbers and hyperinflation has gotten so very...very...quiet. funny how that works.

[snapper]

So remember Trumpkin said he would run the US economy like he ran his business? Seems that may be true at least as apparently between 1985 and 1994 he was losing on average over $100m per year to the total of $1.17bn.

Most peculiarly he has apparently claimed this was 'normal' in the real estate business and that one always a posted a loss for tax purposes. Would this not be tax evasion if true?

The truth is his Pater, who was in the same business, was apparently posting profits so clearly this was not universally true - just Trumpkin was perhaps losing massive amounts - and this at a time when he got "The Art of the Deal" published claiming he was some wizkid property developer who have a gift for making deals. That year and subsequent years he lost money according to his tax statements.

The rumours I have heard is everyone at the time knew he was a con artist and of course after a while the banks would not touch him - he was found to be money laundering in some casino he owned presumably for a cut to help himself out of the financial abyss into which his ineptitude threatened to condemn him. Then who came along... well one of the sons told us already; "alot of our business is with Muscovites." Like the Maison de L'Amitie deal and the Felix Sater deal (though of course Trumpkin "would not recognise" the convicted Sater or his Muscovite Mafia Pater).

This is years old... they have had their claws in him for years. He is totally compromised and has been for years - whole buildings in Florida were sold Muscovites at a premium so they could 'wash' their dirty money. You wonder why he did not tell Putin not to interfere in 2020? Well first he does not give the orders - Putin 'owns' him - and second it is profitable for them both. Sure he used a Lady of the Night or two in Moscow and the Muscovites taped it and laughed but the money laundering and his Trumpkin Tower in Moscow - with a free Penthouse for Uncle Vova - is the real dirt they have on him. A bankrupt money launderer for Muscovite mobsters posing as wealthy and successful business man... no wonder he aspires to be like Putin.

[snapper]

going back to the Trump economy: i'm curious what all the hard-money people who thought we were going into hyperinflation back in 2011 think now.

with a President openly calling for soft monetary policy, literally trying to intimidate the Fed and staff it with his flunkies...all while pursuing a highly stimulative fiscal policy at the same time. despite a roaring economy and full employment.

somehow all that talk of a devalued currency and Greek bankruptcy and fake Fed numbers and hyperinflation has gotten so very...very...quiet. funny how that works.

Yes I recall that long thread and am still in favour of 'hard money' as you call it. I am in favour of higher interest rates now in the US since you're economy seems to be doing well. Why? Well it would give the Fed some leeway to slacken when a slowdown occurs. Second because it will deter inflation so that with rising wages some might really benefit. Nor do I think a President or PM should influence monetary policy to be honest; did not work well for Lenin.

The employment numbers in the US are still a total fabrication in my view for exactly the same reasons. Those who drop off the employment register - what happens to them? Is there some vast black economy in drugs by which they sustain themselves and buy homes?

The Greeks did go bankrupt unless you didn't notice.

[astralis]

snapper,

I am in favour of higher interest rates now in the US since you're economy seems to be doing well. Why? Well it would give the Fed some leeway to slacken when a slowdown occurs. Second because it will deter inflation so that with rising wages some might really benefit.

Second because it will deter inflation so that with rising wages some might really benefit.

that doesn't make sense with an economy that actually has inflation BELOW the 2% Fed target, even with current high levels of growth. pre-emptively reducing money supply and slowing economic activity now when the market is indicating that money supply is already relatively low doesn't do anything for future Fed leeway.

moreover, if you're in favor of hard money, then by definition you won't be in favor of "slackening when a slowdown occurs". you weren't in favor of slackening the last time the slowdown occurred, IIRC...:-) under the hard money view, monetary slackening during a slowdown is harmful, remember?

The employment numbers in the US are still a total fabrication in my view for exactly the same reasons. Those who drop off the employment register - what happens to them? Is there some vast black economy in drugs by which they sustain themselves and buy homes?

if you think they are a fabrication, i'm not sure what you're using as basis for the "real" value. IE, you think the official unemployment rate is a "total fabrication", but you take as gospel the labor force participation rate...statistics compiled by the same people.

The Greeks did go bankrupt unless you didn't notice.

i'm addressing the idea that Greece, a non-diversified tiny economy without control of her own money supply, has relevance to the US fiscal situation.

bottom-line: everything that the GOP accused Obama of doing on the economic side, Trump is doing in spades right now...and Trump doesn't have the excuse of a crap economic situation to justify his actions.

BTW, there IS one economic theory that most closely aligns with what Trump is doing...Modern Monetary Theory, which essentially says soft money/deficits don't matter at all because the government has ultimate control of monetary supply.

[snapper]

that doesn't make sense with an economy that actually has inflation BELOW the 2% Fed target, even with current high levels of growth. pre-emptively reducing money supply and slowing economic activity now when the market is indicating that money supply is already relatively low doesn't do anything for future Fed leeway.

There is loads of money supply - QE saw to that. It's just being hoarded. Company bank balances are full but they are not investing because of trade wars etc... Nor is inflation or worse a reversal, which seems more likely, going to be easy to cope with by traditional monetary policy means when rates are so low. Money should mean something, be finite and not free.

moreover, if you're in favor of hard money, then by definition you won't be in favor of "slackening when a slowdown occurs". you weren't in favor of slackening the last time the slowdown occurred, IIRC...:-) under the hard money view, monetary slackening during a slowdown is harmful, remember?

Certainly I was very much in favour of raising rates to shore up currencies then but also letting the banks go to wall, prosecuting the people who sold the unpayable so called 'sub prime' mortgages that started the whole flop and no QE. By producing money out of nowhere as they did and bailing out the banks and buying bonds etc with 'computer money' they made those (including myself in part) with some money richer compared to those who lost their homes. The result in your country you face today in a traitor populist goon in the White House.

I made money off it for sure... it was easy! Every month the Fed or the BoE would meet and say "Yea more QE" sure as clockwork literally and immediately the $ or £ would drop and gold go up - it was clockwork almost literally. I own a fruit farm in Ukraine now which the money I made from trading QE announcements covered with much left to spare. Of course people who were losing their houses could not get on the hay wagon like those who had prudently saved some money. They could not borrow either, except for like 1500% apc. in which case they got further into debt.

No the response was not just - who went to prison? I think in the UK some guy lost his Knighthood! Ouch! The banks for the most part were bailed out and nothing really changed. The public got the bill for it all. No wonder it seemed that profits were private but losses were public. How many lost their homes? How many divorces did that cause? How many suicides? Nobody counted... We all continued as normal. For me that is just abnormally wrong; I need people - starting at the Fed - held accountable, the sellers of these 'sub prime' mortgages, the securitizers who sold the mortgages - a full inquest into how it all went wrong and remedies to ensure it can never happen again. But no we carried on as normal and just re-monetised the banks - made those like me with some money and the wits to see the clockwork richer and thought everything was rosy. Well it was not of course for the great unwashed and the anti establishment 'populist' new right, which I abhore as much as you, is your result.

if you think they are a fabrication, i'm not sure what you're using as basis for the "real" value. IE, you think the official unemployment rate is a "total fabrication", but you take as gospel the labor force participation rate...statistics compiled by the same people.

In your US terms 'labour participation rate' seems to me operative. I mean if I am participating in the work market but cannot find a job how am I classed? I am not paticipating maybe so do not count as 'unemployed'? What do all these non participating people do? The black economy? Why are they 'non particpators' not counted? It strikes me as a word fudge to lower the count - like saying homeless people who are not on the books do not exist for example. But they do of course and many would love to work and rent a flat or whatever doubtless.

i'm addressing the idea that Greece, a non-diversified tiny economy without control of her own money supply, has relevance to the US fiscal situation.

Not sure I ever compared the Greek economy to the US economy but certainly in Hellas they should have reverted to the Drachma and devalued.

bottom-line: everything that the GOP accused Obama of doing on the economic side, Trump is doing in spades right now...and Trump doesn't have the excuse of a crap economic situation to justify his actions.

Yes I agree. I am still against it!

BTW, there IS one economic theory that most closely aligns with what Trump is doing...Modern Monetary Theory, which essentially says soft money/deficits don't matter at all because the government has ultimate control of monetary supply.

Yea I read that long ago. Just keep printing. See Venezuela.

[DOR]

Employment terms are very carefully -- and quite openly -- defined. If one doesn't know what "participation rate" means, it is a case of ignorance, deliberate or otherwise, and not a conspiracy of the Deep State.

Total Employment. Jobs that are worked at least one hour during the period. Not workers, jobs being done, for pay. (There is an alternative measure that counts the number of employed people, which is a demographic rather than labor statistic, although it is often used as if it were a labor statistic.) Not included are proprietors and partners, unpaid family workers, volunteers, interns, and those on strike or leave for the entire period.

Labor force. All people age 16 and older who are either employed or unemployed.

Labor force participation rate. The number of people in the labor force as a percent of the civilian noninstitutional population.

Unemployed. Those not employed, but available for work and actively looking for work during the period.

Not in the labor force. Those who are neither employed nor looking for work. This is where the children and elderly fall out of the labor force.

Oh, look! A source!
https://www.bls.gov/cps/definitions.htm

[Ironduke]

Oh, look! A source!
https://www.bls.gov/cps/definitions.htm

Here's an op-ed from the WaPo by Robert Shapiro, Clinton's undersecretary of commerce for economic affairs. You're an economist, feel free to give you opinion whether he's full of crap or not. He seems to be making sense to me.

Let's examine how much these technical sleights of hand distort what's happening to people's earnings. Using the White House's preferred data, average earnings rose from $894.06 in January 2017 to $937.02 in August 2018. That suggests impressive gains of $42.96 weekly over the 20-month period and $30.02 weekly over the past year. But what about median earnings rather than average earnings — that is, earnings of those in the middle of the distribution?

The Bureau of Labor Statistics has a different database for that view, and its quarter-by-quarter numbers show a very different picture. Median weekly earnings of all workers rose from $865 in the first quarter of 2017 to $876 in the quarter ending June 30, 2018. The typical working American's earnings increased $11 weekly over 18 months, barely more than one-quarter of the economic progress touted by the White House.

Even that modest gain is not very meaningful. The significance of what people earn lies in what they can do with their earnings, and inflation eats away at what any of us can purchase or save. As a result, serious earnings analysis is always framed in inflation-adjusted, or "real," terms. From January 2017 to June 2018, inflation totaled 3.77 percent, while the $11 increase in unadjusted weekly earnings over those 18 months represented gains of 1.27 percent.

To determine how much the real earnings of a typical working American fell during that period, simply adjust the $876 in median weekly earnings in the quarter ending June 30, 2018, for the 3.32 percent inflation that occurred in the 18 months from the first quarter of 2017 to that date. The result: $876 in June 2018 had the same value as $848.20 in January 2017. In real terms, the weekly earnings of a typical working American fell $16.80, or 1.9 percent, during Donald Trump's first 18 months as president.

https://www.washingtonpost.com/opini...=.b857dfe5c425
Another blow to the White House's preferred economic narrative: The current earnings decline is a new development. Using the same measure, real median weekly earnings increased substantially during Barack Obama's final 18 months as president.[/QUOTE]

[DOR]

Tell me what answer you’re trying to get and I’ll tell you which measure to use.

To keep it simple, national earnings measures that are reported monthly, latest month and year-to-date:

Average hourly earnings of all employees: total private, seasonally adjusted. Data availability: March 2006 – April 2019. Latest: +3.2% (+3.3% year-to-date). Source: https://fred.stlouisfed.org/series/CEU0500000003
Not seasonally adjusted: +2.5% (+3.1% YTD)

Average hourly earnings of production and nonsupervisory employees: total private, seasonally adjusted Data availability: January 1964 – April 2019. Latest: +3.4% (+3.4% year-to-date). Source: https://fred.stlouisfed.org/series/AHETPI
Not seasonally adjusted: +2.9% (+3.3% YTD)

Average weekly earnings of all employees: total private, seasonally adjusted. Data availability: March 2006 – April 2019. Latest: +2.9% (+3.2% year-to-date). Source: https://fred.stlouisfed.org/series/CES0500000011.
Not seasonally adjusted: +1.0% (+2.6% YTD)


If you want median data, you need to use quarterly figures.

Employed full time: median usual weekly real earnings: wage and salary workers: 16 years and over, seasonally adjusted. Data availability: Q-1 1979 – Q-1 2019. Latest: +1.4%. Source: https://fred.stlouisfed.org/series/LES1252881600Q
Not seasonally adjusted: +1.4%.

But, adjust to age 25 and over and the real earnings rose 2.7% in Q-1.
Add a bachelor’s degree or higher and it rises to 5% (nominal), or +3.4% when you subtract Q-1 CPI.
Less than HS diploma? +2.7%, or barely 1.1% real.

We can slice and dice by age, gender, race, education, and industry. So, tell me what you’d like to “prove,” and I’ll show you how to do it.

So, be careful of newspaper reporting, and highly suspicious of anything that has an element of analysis.

[GVChamp]

going back to the Trump economy: i'm curious what all the hard-money people who thought we were going into hyperinflation back in 2011 think now.

with a President openly calling for soft monetary policy, literally trying to intimidate the Fed and staff it with his flunkies...all while pursuing a highly stimulative fiscal policy at the same time. despite a roaring economy and full employment.

somehow all that talk of a devalued currency and Greek bankruptcy and fake Fed numbers and hyperinflation has gotten so very...very...quiet. funny how that works.

Unfortunately these people are only quiet because political calculations make it convenient, and they still think the Fed was making the wrong moves back in 2010/2011: their new thing, at least in the circles where I run, is that the Fed cannot really affect these measures (then why is it dangerous, since they can't even affect the numbers...). It's insane. Other people were proclaiming a new normal of permanently high unemployment because automation was finally wrecking the job market, and we needed to roll out a UBI immediately. Also insane.

I'd say at the end of it, the people who looked the rosiest are the mainstream, consensus folk. But no one will ever buy that, because said folk didn't have crystal balls to see the 2008 financial collapse. Quite insane.

So remember Trumpkin said he would run the US economy like he ran his business? Seems that may be true at least as apparently between 1985 and 1994 he was losing on average over $100m per year to the total of $1.17bn.

Most peculiarly he has apparently claimed this was 'normal' in the real estate business and that one always a posted a loss for tax purposes. Would this not be tax evasion if true?

The truth is his Pater, who was in the same business, was apparently posting profits so clearly this was not universally true - just Trumpkin was perhaps losing massive amounts - and this at a time when he got "The Art of the Deal" published claiming he was some wizkid property developer who have a gift for making deals. That year and subsequent years he lost money according to his tax statements.

The rumours I have heard is everyone at the time knew he was a con artist and of course after a while the banks would not touch him - he was found to be money laundering in some casino he owned presumably for a cut to help himself out of the financial abyss into which his ineptitude threatened to condemn him. Then who came along... well one of the sons told us already; "alot of our business is with Muscovites." Like the Maison de L'Amitie deal and the Felix Sater deal (though of course Trumpkin "would not recognise" the convicted Sater or his Muscovite Mafia Pater).

This is years old... they have had their claws in him for years. He is totally compromised and has been for years - whole buildings in Florida were sold Muscovites at a premium so they could 'wash' their dirty money. You wonder why he did not tell Putin not to interfere in 2020? Well first he does not give the orders - Putin 'owns' him - and second it is profitable for them both. Sure he used a Lady of the Night or two in Moscow and the Muscovites taped it and laughed but the money laundering and his Trumpkin Tower in Moscow - with a free Penthouse for Uncle Vova - is the real dirt they have on him. A bankrupt money launderer for Muscovite mobsters posing as wealthy and successful business man... no wonder he aspires to be like Putin.

This is out of scope for the thread, but I am conflicted. Trump was likely engaging in illegal tax evasion. His losses were absolutely extraordinary. As a general rule, Congress should have broad authority to request tax returns. However, IMO, the NY Times and the like are engaging in unethical behavior. If someone does not want to reveal their tax information, it is not appropriate to take documents from an auditor or their tax accountant, or try to piece together information from anonymized data.

Also, people seem to have no understanding of taxes, accounting, or finance. At all. It's like my Dad saying that companies shouldn't be allowed to claim depreciation as an expense, and all taxes should be paid on revenue, not profit. I don't want the mob deciding ANY of these issues, because they are clearly incompetent. We finally have a mainstream consensus that the "Trade Deficit" as imagined is stupid, but that's only because Trump is railing against it: not too long ago, politicians were citing that as the barometer of economic performance ( and I am sure they will again as soon as Trump is gone and it becomes politically convenient to talk about how much money we are "losing" to China again).


Ironduke.
Couple points:
1. Take these figures with a grain of salt.
2. Make sure to consider median family incomes and not just median hourly worker wages.
3. Don't forget to include the value of fringe benefits.
4. Defining the period defines the result. Like, if you look at the timespan between 1945 and 1975, wow, we really suck at this Cold War thing. What a difference 10 years can make. You could have made similar comparisons with the early industrial revolution in Britain as well, which would be obviously wrong in hindsight.
5. "Gravy train." What makes you think workers generally weren't riding a similar gravy train in the 60s and 70s? Hate to tell you this, but IME the line-workers and office drones, while important, are not the ones getting you from 1x to 10X performance.