May Records Stellar Economic Growth but the Media Are Fixated on a Trump Tweet

President-elect Donald Trump and Vice President-elect Mike Pence talk with factory workers during a visit to the Carrier factory, Thursday, Dec. 1, 2016, in Indianapolis, Ind. (AP Photo/Evan Vucci)

President-elect Donald Trump and Vice President-elect Mike Pence talk with factory workers during a visit to the Carrier factory, Thursday, Dec. 1, 2016, in Indianapolis, Ind. (AP Photo/Evan Vucci)

 

The US economy racked up impressive gains last month. 223,000 jobs were added to the US economy blowing past the 190,000 estimated by economists.

Wages rose by 8 cents an hour (this is technically called “crumbs”) and were up by 2.7% (more crumbs) over 2017.

Unemployment (U-3), which is comprised of people who are looking for work and have been out of a job for at least four weeks, dropped to the lowest level since 2000.

The other interesting chart is for Unemployment (U-6). This is currently unemployed, workers who are discouraged, that is, not looking for work, and people who are working part-time but want full-time work.

(h/t for the charts to The Big Picture)

Overall, this is stellar news. The only blot in the copybook, so to speak, is a labor force participation rate which is stuck at 62.8%. The plural of anecdote is not data but I know quite a few guys who are “not in the labor force” but who are working, primarily in building trades, for cash only. There is probably more of this going on than the feds give credit for. And I’m sure the tax bill and a reduction in regulatory meddling in the economy had zero to do with. Because this all has to be dumb luck if Trump is involved.

The American economy roared into overdrive last month, delivering the strongest job gains since February. The report underscored other recent signs of strength, like robust personal income and spending data reported earlier this week. The unemployment rate for May was at lows not seen since the heady days of the dot-com bubble.

Policymakers at the Federal Reserve are almost certain to raise interest rates when they meet this month, and have said they expect at least one more increase later this year, most likely in September or December. The stately pace of the Fed’s campaign to tighten monetary policy has reassured Wall Street, which has been edgy lately over trade tensions and the prospect of a populist-style government in Italy.

Many of the gains in May were centered in the kind of deeply cyclical sectors that tend to perform best late in the economic cycle, like manufacturing, which added 18,000 jobs, and transportation, which registered a 19,000 gain. Less economically sensitive sectors also kicked in last month, with health-care employment rising by 29,000.

But that wasn’t the big news for the Washington Post and some other people.

A couple of hours before the official report was released, President Trump sent out this tweet:

The Washington Post: Trump breaks protocol, sends markets a clear signal on jobs report before numbers are released.

President Trump on Friday broke with decades of protocol and commented publicly about the highly anticipated jobs report data 69 minutes before they were released by the Bureau of Labor Statistics.

White House National Economic Council Director Larry Kudlow said on CNBC on Friday morning that he briefed Trump on the details of the report Thursday evening, calling him on Air Force One. That means Trump had detailed knowledge of the specifics of the jobs report, knowing that it would be strong and better than expected.

The jobs data come out once a month and often can lead to massive buying or selling trends on Wall Street, depending on how the information is received. It is extremely closely held and kept under tight control until it is released at 8:30 a.m. on the first Friday of each month. A select number of administration officials receive the data the day before, but officials are prohibited from tipping their hand about what the numbers reveal.

“He chose to tweet,” Kudlow said, downplaying the matter. “You can read into that 10 different things if you want to read into it.”

Kudlow said of the way he personally handled it, giving it to Trump the evening before, “by law and custom, that is correct.”

Seriously, Larry? The Obama administration was able to kill a US Border Patrol agent and kick off a genocidal war in Syria, and give Iran nearly $2 billion in small bills and not have an investigation.

What the soiled drawers are all about is a policy directive on handling statistical information, particularly information that is market sensitive. The purpose is to prevent insider trading or to keep federal employees from releasing the data to a small group of people rather than to the nation at large. Policy directives are not law. Policy directives certainly don’t bind cabinet secretaries or the president. The fact that Trump is followed by 52 million people on Twitter means that the worst you can say is that he did a pre-press release.

Kudlow said Friday that Trump didn’t breach this prohibition because he didn’t reveal the precise numbers in the jobs report, only telling people on Twitter that he was “looking forward” to its release.

And even if he had released the numbers, he has complete authority to do so.

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