White House Economic Adviser Larry Kudlow believes the U.S. economy is booming under Donald Trump and the data supports it. Kudlow appeared on Fox Business where he expressed frustration that the mainstream media and certain “individuals running for higher office” were attempting to paint the economy as being in a recession.
Larry Kudlow is exactly right on most of what he said. There’s only one element of his claim that needs to be examined in more detail.
He said that the distribution of economic benefits helps the lower half of the American population and, in some cases, the lowest 10% the most.
On the broader issues, there is no question about Larry Kudlow’s accuracy. The economy has averaged a growth rate of 2.9% since Donald Trump took office, crushing the 1.9% average annual rate under Barack Obama.
Virtually every important economic indicator has been on the rise since Donald Trump took office and substantially so.
The consumer confidence index is one of the more important metrics, as it indicates how confident households are about their future financial situation. A score above 100 signals a boost in confidence toward that situation.
The score didn’t break the 100-mark until 2015 under Obama and soared under Trump to 100.9. It is presently at 100.5.
A related metric, the consumer sentiment index, measures consumer confidence about the overall economy. The index was mired below 80 until 2015. It closed out the Obama era at 89 and has since hovered at about 100.
While the president does not control the stock market, his administration’s economic and other policies heavily influence it. The stock market has soared 30% since Donald Trump’s election, which reflects the entire country’s optimism about corporate earnings. If earnings are rising, that means consumers are spending.
There are metrics that will allow us to test Larry Kudlow’s claims regarding who is being helped in this economy the most.
The labor force participation rate shows the percentage of the work-eligible U.S. population that is in the market and either has work or is actively looking for work.
This metric was at 65.7% since that statistic began being kept in 1948. And 62.9% was also the lowest rate since Jimmy Carter’s presidency.
We can’t view that number in a vacuum, however. We must compare the unemployment rate to the labor participation rate. The labor force participation rate has been stable, and the unemployment rate has declined under Donald Trump from 4.7% to an astonishing 3.7%.
That means all of the people who were actively looking for work but couldn’t find it have now found jobs. This is confirmed by the number of employed people in the country.
Sure enough, the Bureau of Labor Statistics shows that 152.1 million people were employed when Donald Trump took office, and today that number is 5 million higher.
Larry Kudlow is correct about where those jobs are being distributed. They are going to the bottom half of Americans whose employment situation has not only improved but is expected to continue to improve. The icing on the Larry Kudlow cake is wage growth. It rose modestly under Obama’s second term but has skyrocketed to nearly 3.5 percent under Trump.