Friday morning, the Bureau of Labor Statistics will release its first monthly jobs report of the Trump administration. Since the data covers the month of January 2017 and Trump wasn’t inaugurated until January 20, it will be hard to make the case that whatever it says tells us very much about the efficacy of Trump’s policies.
But what — if anything — Trump says about the jobs report could tell us a lot about the shape of things to come. As a candidate, Trump was sharply critical of the main official data series, which he both questioned directly and indirectly undermined with rhetoric that painted a considerably darker picture than what the data shows. His press secretary, Sean Spicer, was equivocal when asked last week about whether Trump views the BLS unemployment rate as a reliable indicator.
This has some economists worried that over time a Trump administration will seek to actually monkey with the underlying data, manipulating it for political purposes. Another possibility is that Trump will leave the data alone but continue to disregard or disparage it.
A third and perhaps most intriguing possibility is that Trump will simply take the data at face value, claiming that under his administration jobs are plentiful, wages are high, and the unemployment rate is low. It would make sense politically for a president to tout the good times unfolding under his administration, and what would make this an especially vexing strategy for Trump’s opponents is that for once, he’d be telling the truth.
Trump has a difficult relationship with economic data
As a candidate, Trump took a very dark view of America’s economic situation. Campaigning in September, for example, he swept aside official statistics indicating that the unemployment rate was 4.9 percent. He argued that there were “92 million Americans are on the sideline outside of the workforce” who collectively represented “a silent nation of jobless Americans.”
This figure was derived by looking at the Current Population Survey’s data series for Americans 16 and over who are not in the workforce.
It is certainly true that some of the people in this category represent a form of shadow unemployment. But many of them do not. Melania Trump, for example, is not unemployed — she’s a stay-at-home mom. Hillary Clinton is retired. A year ago, Tiffany Trump was a full-time college student. A world with zero people out of the labor force would be a world without any retirees, full-time students, or full-time parents — likely a fairly bleak world in which the majority of the population is employed in subsistence agriculture.
The truth about the labor market
Like any good myth, the idea that the low unemployment rate of 2016 doesn’t reflect the true state of the labor market is grounded in a couple of strands of truth.
It’s true that the employment-to-population ratio — the total share of the population that has a job — has sunk to a decades-long low. This is a real fact about the economy with real consequences for economic growth, but the main reason is demographic — the baby boom generation is retiring and pushing the ratio down.
Another accurate claim is that the main unemployment rate (known as U3 to economic data nerds) takes a rather narrow view of what it means to be unemployed. A broader measure known as U6 would show a larger number of hard cases: It includes part-time workers who say they want a full-time job and people who aren’t actively looking for work but say they would like a job if one were available. But while it’s true that U6 is higher than U3, this is always the case. Neither rate is unusually high at the moment.
If you think the nation’s economy was in a disastrous state in March 1997 or December 2004, then you’re entitled to say the same thing about conditions in recent months. But while we’ve certainly known some tighter labor markets over the years, things are mostly pretty normal now.
Now that Trump is actually president, he just might decide he wants to admit it.