Popular Economics Weekly
The New Year will make some people very wealthy—mainly stockholders, corporate execs, and real estate moguls. And as minimum wages begin to rise this year in many cities and states (but not all), those at the lower income end will also get a boost. But the middle class? They will be hit hardest by the limit to property tax and mortgage deductions in the new tax bill. And don’t forget the spending cuts to the social programs that will lower incomes of those dependent on Medicare and Medicaid.
However, this is a column about the prospects for higher paying jobs and economic growth. And it looks like upcoming statistics will show the ninth year of solid growth. But that is only if Congress finally enacts an infrastructure bill that would not only boost higher paying jobs, but productivity as well. The hurricane devastations and winter ‘bomb’ cyclones make that an obvious priority.
Just 148,000 new nonfarm payroll jobs were added to payrolls in December, according to the U.S. Bureau Labor Statistics, down from the prior two months’ 232,000 average. But economists believe it was partly due to the extreme winter weather that has essentially snowbound the northern half of the U.S.
Everyone needs to see The Day After Tomorrow, a harrowing movie about extreme climate change that brings in a new Ice Age, to understand what can happen if such extreme weather conditions continue.
All else was strong with the unemployment rate holding at 4.1 percent. Job gains were led by the health care, construction and manufacturing sectors. Other industries had smaller gains. The only significant weakness was in the hard-hit retail sector, which shed more than 20,000 jobs.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.9 million in December but was down by 639,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.
So this economy is putting people back to work, and could equal the Clinton recovery from 1991 to 2001 before GW Bush cut taxes and swelled the federal deficit once more; that had actually been in surplus for the last 4 years of the Clinton administration.
The lesson we learned then was Clinton had to raise taxes and cut back military spending, the largest portion of the federal budget. But Republicans once again are adding to the deficit and overall debt with their tax cuts.
So the real silliness in 2018 will be one party believing that cutting taxes and social programs will keep the federal debt from growing even larger. Not possible, because over the long term the monstrous federal debt will take even more money out of the economy and growth to pay the interest required to service said debt that could grow to $25 trillion in ten years, according to some projections.
And the Fed will keep raising interest rates at the same time to prepare us for the next recession.
Harlan Green © 2018
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