There is a debate as to whether President Trump is to be given credit for job and wage growth that wildly exceeded expectations set by economists in his second month in office. This is of course following last months job growth which also exceeded expectations. The critics say that Presidents by themselves have very little impact on the economy and that there was not enough time for any of the policies of President Trump to be felt. First off if this is true then Obama does not deserve any credit for his economy either. Second if this would have happened under the Obama economy then it would have. During his term we saw the labor participation rate steadily decline and job growth barely outpace population growth. In the two months of Trump we have seen the labor participation rate rise and wages go up in addition to the massive increases in jobs.
Power of Optimism
When the professional economists say that the President has very little impact on the economy they are wrong. What is worse is that they are lying to our faces and they know it. One of the most important jobs of the President is creating a positive outlook for the economy. When people have confidence in the economy they spend more. If they spend more then other the companies need to hire more to produce more for them which then leads to more spending. A positive consumer outlook also factors in to companies who anticipate this and make hiring decisions based of it. Business decisions and stock values are also based on the culture of deregulation brought up by Trump. All of this is happening before any EO or law is passed. I recall W Bush once was asked how everyone could help with the economy and all he said was “Go shopping.”
Consumer confidence, optimism, and other things of this nature are so commonplace in our economy that it is impossible that economists would not know it. For almost its entire history Amazon has not made a profit, yet its shares are valued very highly. The stock market itself picks winners and losers based on nothing but projections and other non-tangible things and companies can fall because of that. Retailers hire and fire employees based on whether they think that consumers will spend. Consumers either spend or save depending on their confidence on the economy. Let me reiterate that economists are aware of these factors. We have to question their partisanship in trying to omit them.
So what has Trump actually done? First off by creating an environment where we are more certain to deport illegals he has caused border crossings to drop by 40%. This leads to the jobs that those illegals would have taken being given to American citizens instead and those jobs paying at the very least the minimum wage as opposed to the slave wages usually given to illegals. This money then gets spend inside the local economy as opposed to getting send elsewhere.
Second Trump has made it very clear to companies that if they hire American he is very willing to praise them on twitter and on tv with all the PR benefits that entails. If they do not hire American then he is also very willing to criticize them on twitter and on tv. By negotiating with the companies very publicly President Trump also elevates their role in the process and makes them more willing to invest in the country.
Third by showing that he is willing to try and save jobs on a retail level like with Carrier and other instances like that he instills confidence in workers to spend as they will be more secure in their jobs.
Whether you like Trump or not he has instilled a feeling of confidence in the country regarding the economy. Consumer spending is at its highest point in a while and confidence in the economy is as well. That more than anything drives job and wage growth and Trump deserves credit for that.