The Morning Jolt

Economy & Business

Whodunit: The American Economy Edition

(Kevin Lamarque/Reuters)

Making the click-through worthwhile: We dispel some fiction about the economy, give a quick rundown of the Omarosa news, and take a look at some worrisome higher-education trends.

Whose Numbers? Which Economy?

A political debate over which president deserves credit for the state of the economy has broken out. Last night, press secretary Sarah Huckabee Sanders asserted, incorrectly, that President Trump had tripled the number of jobs created for African Americans under Barack Obama; she later corrected herself on Twitter. But this has been a long-running debate among politicians and political advocates. Democrats downplay solid economic growth, controlled inflation, and record-low unemployment numbers, with the knowledge that last quarter’s 4.1 percent GDP growth was driven by idiosyncratic trade factors and that other measures such as sluggish wage growth show the economy still has a ways to go. They argue that Obama deserves credit for the expansion which Trump is bound to muck up. Republicans accuse liberals of ignoring the reality that President Trump is presiding over a continuing, robust expansion. They also insist that he deserves credit for the expansion, which, they might add, is far superior to the expansion begun under Obama, thanks to Trump’s policies of tax cuts and deregulation.

These are standard-issue political fights between standard-issue political fighters. They happen every presidency. Of course the party in power will take credit for what is generally a solid economy. Of course the party out of power will try to poke holes in that narrative. What is deeply exasperating about this argument is not its existence but that it has dragged in ostensibly disinterested observers and brought certain political journalists to pick sides when they do not have to.

Ramesh Ponnuru and Michael Strain are two journalists who do not fall into that category. In a recent print issue of National Review, they have an excellent article, “Trumponomics,” where they simply take a dispassionate look at the economic trends of the present expansion and meditate upon possible causal factors. The bottom line:

Republicans are talking more about the state of the economy than Democrats are — and they are taking credit for it, too. It is a tribute, they say, to Republican policies, and especially to the tax cut Republicans enacted at the end of last year and to the deregulatory actions that the Trump administration has taken.

This kind of boasting [from Republican politicians] is par for the course in politics. Many economists and many conservatives insist, however, that politicians and political commentators often overstate the extent to which a president affects an economy shaped by the decisions of millions of businesses and consumers. A disinterested look at the evidence — or, at least, the most disinterested one we can offer — suggests that in the case of the Trump administration there is some truth to both the Republican politicians’ and the economists’ views, but more to the latter. . . .

President Trump inherited an expanding economy. Republicans have implemented policies that should, on balance, make it modestly stronger over time. But that balance could change if the president does not restrain his worst impulses. In that case the credit Republicans are getting from voters could quickly turn to blame.

Current trends in unemployment or growth or inflation or labor-force participation did not start in 2016, though measures such as business and consumer confidence and productivity growth have indeed improved since Trump took office. Political operatives will continue to have this debate, but the rest of us don’t have to.

Don’t Tape Me, Bro

Since this is a morning newsletter, and Omarosa-related matters are currently dominating the news cycle, I suppose the time has come to address them. It’s a depressingly familiar ordeal. Recently ousted from the White House and selling her new book, Omarosa Manigault Newman says she has tapes of Donald Trump using the “n-word” on the set of The Apprentice. In the book, she says she heard of the tape’s existence; since publication, she has said in interviews that she heard the tape itself. The White House is sort of issuing non-denial denials — Huckabee Sanders said yesterday that she “can’t guarantee” the tape doesn’t exist but helpfully noted that Trump has never used the word around her — and Omarosa produced a recording of a conversation between her and two White House campaign aides from the time of the election in which Katrina Pierson declares, “He said it. He said it, and he’s embarrassed.”

I suppose we’ll see what happens if the tape is real. Or you will, anyway: If the tape comes out, I’ll be moving to Bend, Oregon, sans Internet-enabled devices to live an ascetic existence watching movies rented from the last Blockbuster in America for the rest of my days, blissfully unaware of the political news cycle.

The Return on Degrees Is Fading

The St. Louis Federal Reserve has concluded a three-part study on the economic advantages of college and graduate degrees. Having a degree has long been associated with higher family income and wealth, but over time, the monetary returns of college and graduate degrees have changed.

There is a significant disparity in earnings between those who do have college degrees and those who do not. The average family with a four-year degree earns 69 percent more than the average family without a degree, while the average family with a graduate degree earns double the non-degree average. In terms of accumulated wealth, the average family with a college degree has accumulated 201 percent more wealth than a non-degree family, while the average postgrad family has accumulated 242 percent more.

But the advantage is fading. Though the boost to income remains strong, it was higher among older generations. White families whose parents have either four-year or graduate degrees and were born in the 1980s enjoy less of a bump in income than families with older parents; black families enjoy the same boost to income as their older counterparts. But white and black families are having a far harder time building wealth. The numbers are stark.

I’ll have more on potential reasons later, most likely on the Corner. The most obvious would be the skyrocketing cost of college, another could be rising housing costs, another the proliferation of disciplines that do not teach students marketable skills. (Then again, I was a philosophy major.)

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