Judging the State of the Union & Trump’s First Year

President Donald Trump gave an extremely positive State of the Union speech tonight. An impressive 75% of listeners approved it. He painted a rosy picture of a booming economy and a great success in foreign policy. What is the objective reality and how should Trump and the state of the USA in 2018 be evaluated?

Stock Market: During the campaign, Trump correctly identified the stock market as a bubble. Now he embraces the debt-fueled insanity that was created by the Federal Reserve Bank. Average Americans shouldn’t celebrate the stock market. And there are many good reasons why there might be a financial crisis soon.

Let’s not grade this one.

bubble - stock market 2

GDP: For a guy who promised 4% or 5% GDP growth, the 2017 GDP growth was 2.3%. Meh! It was worse than many years under Obama.

So Trump gets a B- on GDP.

GDP Trump Obama

Unemployment: Of course, Trump will boast about the lowest unemployment level in decades (4.1%). This is very good, but let’s not forget that during the campaign he called the unemployment numbers fake and claimed that the real unemployment rate is close to 40%! He used the labor participation rate, which was about 62% in 2016 (which meant that 38% of American adults weren’t working).

Well, that number hasn’t budged much and, in fact, has gone down a bit (from 62.9% in Jan 2017 to 62.7% in Jan 2018)

Labor Participation 2007-2018

The labor participation rate for the prime age (25-54) has gone up under Trump, but technically it means that 18% of that age group is still unemployed! (Of course, many of those may include women who’re married and choose not to work).

Labor Participation Rate 25-54 (2)

The U-6 unemployment rate is still high at 8.1%, although down from 9.1% in Dec 2016.

Here’s another real way to look at the employment situation. Look at the actual number of employed Americans. And then see how many new people got jobs.

In Dec 2016, there were 152,233 million Americans with jobs. That number changed to 154,021 million by Dec 2017. Thus the change in employment = ~1.8 million. Wait a minute! But the jobs added were 2.1 million! Yup. More jobs than people. How so? Multiple jobs per person. So let’s take a look at the change in employed Americans for the last few years. You can see that Trump added fewer jobs than many of Obama’s years.

Employed People Let’s not forget that retail took a beating in 2017. It was truly a retail apocalypse, with more than 8600 store closings! Radio Shack, JC Penney, Macys, Sears, Abercombie & Fitch, Gap, BCBG, American Apparel, Toys R Us, Payless, Walgreens … you name it. This includes many retailers who filed for bankruptcy (Chapter 11) as well.

retail-apocalypse-history.jpg

Retail employment fell by 67,000 in 2017, after rising 200,000+ in 2016. It’s not just because of Amazon. It’s got to do with the corporate debt that’s finally catching up. Retail closing is probably gonna get worse — some predict the number will be 12,000 in 2018.

Retail Apocalypse 2017

So, overall, Trump gets B- for unemployment.

Wages and Jobs: The average wage grew only 2.5%, which is the normal these days, although 3% is the healthy number that economists recommend. Nothing Trump can do about it. But still, it means that, after inflation, the wages for most Americans barely budged. Yes, a few people got bonuses because Trump allowed the corporations to repatriate (bring back) hundreds of billions of dollars from offshore banks. But this trickle down is a one-time event and not a fundamental change.

The median wage for salaried, full-time workers has actually gone down a tiny bit from Jan 2017 to Dec 2017.

So, Trump gets B for wages.

Number of Jobs

As for jobs, 2017 added 2.1 million jobs, or 175,000 jobs per month on the average. It was actually lower than the 2.2 million added in 2016 under Obama! Trump used to make fun of Obama for not adding at least 300,000 jobs per month!

So, Trump gets “C” for jobs added

Jobs Needed 300K

Debt, Federal Deficit and Trade Deficit: The national debt grew a lot less in 2017, compared to Obama years. In 2017, the federal total debt went up by about $500 billion.

Debt on Jan 20, 2017: $19.95 trillion;
Debt on Jan 20, 2018: $20.50 trillion

Debt growth Obama v Trump

So, Trump gets a B+ for handling debt. Ideally, we should have a surplus so that we can start paying off the damn debt!

As for Trade Balance (Deficit or Surplus), remember all the great promises by Trump? “I will negotiate hard, name China as a currency manipulator, renegotiate trade deals and stop our trade deficit!” Well, 2017 was a record trade deficit year!

In terms of goods, the trade deficit was close to whopping $800 billion!
Overall trade deficit (goods + services) was $500 billion
Our trade gap (deficit) with China in 2017 was about $350 billion

US trade deficit with both Mexico and China went up in 2017 (by 11% and 7% respectively)! This is a horrible stat for Trump who ran on this platform.

Trump got some good deals signed up with China during his visit, but those are long-term projects. He hasn’t been able to renegotiate or even make any real progress on NAFTA or WTO. His tariffs on solar and washing machines are kind of silly and may result in more US job losses. There has not been any meaningful flow of manufacturing jobs back to the US — why would the companies do that, unless they’re forced to.

So, for Trade, Trump gets a D for Trade. (For a normal president, it will be a B).

FOREIGN POLICY

He did quickly defeat ISIS! A+ for that!
He did NOT get into a huge war in Syria. A+ for that!
He has left many military bases in northern Syria still and the US is meddling with Kurds and still hoping to Balkanize Syria in sneaky ways. F for that!
He has sent more troops to Afghanistan where Taliban has grown stronger in 2017. (We need to get out of Afghanistan). C for that

Outside of Syria, Trump has screwed up the image of America and his presidency. Big league! Now America is viewed less favorably China and barely above Russia!

Poll Gallup world on leadership 2

With North Korea, China, Russia, Pakistan, Turkey, Afghanistan, Iran etc., it’s not been a good year. The Jerusalem issue is popular with Trump’s base, but got rebuked by 128 countries at the UN. Jared Kushner and his buddy in Saudi Arabia – Crown prince Salman – really screwed up with Qatar and Lebanon.

Even the allies in Europe are perplexed and bothered by Trump. He had to apologize to Piers Morgan for his re-tweeting of Britain First so that he can go to the UK!

Much of the blame rests on, of course, America’s Deep State and military-industrial complex, which is all about chaos and confrontation. Mueller and the “RussiaGate” conspiracy wasted a lot of time and also prevented Trump from a detente with Russia. No amount of logic will change the minds of the Democrats. All that said, Trump is also clueless about foreign policy and diplomacy. Hopefully he will learn.

Trump gets a C for foreign policy

Immigration and Conservative Issues:
No WallTrump gets a D
Deportation numbers — actually lower than Obama. So Trump gets an F;
DACA & other immigration issues: Trump gets an A for efforts. With courts and Congress against him, his hands are tied.
SCOTUS – A Supreme Court Justice that conservatives can be very happy about. A+
Deregulation – Corporations are happy. Solid “A
Tax Cuts – Win for Conservatives. Solid “A

OVERALL RANKING: America has gone crazy and it’s too divided. The lying media, the corrupt FBI and the hyper-partisan Democrats constantly try to sabotage Trump every day. That said, Trump didn’t handle many issues diplomatically. Democrats and liberals really, really hate Trump! Also, he’s supposed to hire the “best people,” but he fired so many White House staff. It’s a tough job, made tougher by the environment. So, we have to give him a mulligan.

Summarizing the evaluation…

B- for GDP
B- for unemployment
B- for wages and jobs added
A for tax cuts
B+ for conservative issues

B+ for debt
D for trade

C for foreign policy
B for leadership
A for keeping his base happy and loyal
A for the SOTU speech

Overall, I would say, “B-” for Trump’s first year. What do you think?

Author: Chris Kanthan

 

 

 

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