Lowest U-3 Unemployment Rate In 50 Years But Don’t Call It MAGA

The Donald will never, ever drain the Swamp for a very basic reason: Trump has maximum low regard for free markets and the principles of liberty, fiscal rectitude and sound money; and, actually, is the worst kind of statist—an advocate of Big Government centered on the cult of his own personality.

That is, he’s neither a capitalist nor socialist, liberal nor conservative. He’s a Trumpite, and Trump-O-Nomics is based on whatever economic whims, nostrums, prejudices or petulances happen to seize his fancy at the moment.

That’s why, for example, he is constantly citing  U-3 unemployment statistics as evidence of the greatest economy ever, and then adding “thank you, Mr. President”, as if he had anything at all to do with what are simply the surface metrics of American capitalism on an extended expansion streak.

That much is evident in the unbroken decline of the U-3 unemployment rate since it peaked at 10.0% in October 2009. We will happily send a free magnifying glass to anyone that can spot with the unaided eye the point where Obama took his exit from the Oval Office and the Donald moved in.

Indeed, the best you can say is that Trump has not (yet) done anything to push the current octogenarian business cycle into the recessionary drink, but we doubt that merely riding the pre-existing expansion wave deserves repeated self-congratulation.

In fact, the January jobs report showed the cycle is steadily running out of steam as we demonstrated on Friday, meaning that the low U-3 unemployment numbers the Donald ritually recites are merely the imprint on the charts of the residual economic momentum he inherited. You can see that in the steadily shrinking figure for the monthly rate of decline in the U-3 rate since the post-recession peak.

As it happens, the chart below can be divided into three periods which reveal the silliness of the Donald’s U-3 braggadocio:

  • During the first 49 months of jobs recovery between October 2009 and November 2013, the unemployment rate declined from 10.0% to 6.9% or by 0.063% per month;
  • During the last 37 months of the Obama term, the U-3 rate fell further to 4.7% as of December 2016 or by 0.060% per month;
  • During the Donald’s 37 months in the Oval Office thru January 2020 the rate fell to 3.6% or by just 0.0297% per month.

To be sure, the recent rapidly descending rate of monthly improvement has nothing at all to do with Obama’s virtue or the Donald’s shortcomings.

It is simply the way the business cycle works: The large post-recession inventory of unemployed workers got steadily drained by the sheer growth momentum of main street capitalism at work; and, as the cycle aged and the bottom of the barrel was reached, so to speak, the rate of reduction slowed sharply as per the monthly gain statistic cited above.

In other words, the Donald’s ballyhoo about the greatest economy ever is based on the oldest trick in the politicians play book—namely, taking credit for the sunrise if he/she happens to be blathering at that particular hour of the day.

America’s weak and debt-encumbered economy is being made to look gangbusters by the Donald and his GOP minions by simply ignoring the reality of the business cycle and the fact that Trump is not only the oldest President ever elected, but also entered the Oval Office in month #90 of what at month #127 is now the oldest business cycle, as well.

That’s especially apparent in the  U-3 rates for minorities, women, the disabled and left-handed albinos, among other sub-categories, which are being trotted out in every stadium oration by the Donald and the robotic talking points issued by the RNC and/or Fox News, as the case may be.

For instance, here is the 48-year history of the U-3 rate for black men over 20-years of age. It’s self-evident that there is a pretty violent cycle to it; that it always reaches very low levels during the final months of an expansion (the blue panels between the white recession areas); and that the Donald inherited a cycle that was 83% completed by the time he took office.

That is, the black male unemployment rate has dropped from a peak of 17.9% (April 2010) to 5.6% in January 2020, representing a decline of 12.3 percentage points. But 10.2 percentage points of that decline had already been realized as of December 2016 when the rate stood at 7.7%, with the final 2.1 percentage points of decline being racked up during the Donald’s 37 month tenure.

Needless to say, only a partisan hack could call this chart evidence of the failed Obama policies and the Donald’s fabled turn-around. In fact, the 5.2% unemployment rate for black men recorded way back in December 1973 was far more positive than today’s 5.6% number for the same reason that the entire U-3 unemployment series is a noise-ridden crock.

To wit, there are millions of workers considered “not in the labor force” by the BLS, thereby making any claim of the lowest rate in 50-years entirely bogus.

For instance, here is the labor force participation rate for black men 20-years and older, which today stands at just 67.6% compared to 78.5% at the low point back in December 1973. Accordingly, had not millions of black men dropped out of the labor force, the U-3 rate for this sub-category today at the 1973 participation rate would be 18.7%!



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