Home > Uncategorized > D. Trump lies, again. But he has a point. A HUGE one.

D. Trump lies, again. But he has a point. A HUGE one.

According to D. Trump “The GDP rate (4,2%) is higher than the unemployment rate (3,9%) for the first time in over 100 years!”. This tweet.  Comparing the rate of GDP growth with the unemployment rate surely is interesting. And situations where the unemployment rate is lower than the rate of growth (U<G) are rare and remarkable as well as agents of change.

D. Trump is wrong about the economic history of these events (graph). During WW II as well as during quite some years in the fifties and the sixties growth was higher than the unemployment rate, too. While the thirties show that we have to account for high rates of legacy unemployment. Using, as D. Trump does, annualized quarterly data would surely show more episodes. Even then, 1999 was the last time, which isn’t over 100 years ago. And personally, I would be delighted to get the source of his unemployment data for the period before 1929.

00TrumpHaving stated this, I totally agree that the ‘U<G’ situation surely is worth a presidential tweet! Josh Mason has been lambasted for pointing out the possibility for strong growth even when unemployment is low. Turns out he was right after all. Too bad we needed the policies of an egomaniac to proof this. For progressive economists, there is a lesson to be learned, here. Let’s go for a ‘BU<G’ situation, ‘B’ standing for ‘Black’.

  1. patrick newman
    September 10, 2018 at 3:12 pm

    Indeed it is also how real the official rate of unemployment is when there are so many described (in the UK but there is a USA equivalent) as economically inactive which strangely seems to vary according to the availability of jobs. And there is underemployment – people who need to work more but are forced to be part-time. Add also zero hour contracts and pretend self-employed – who pick up work when they can! growth – wasn’t the basis for the current growth laid down by Obama policies? Only in 21st capitalism can lower unemployment and higher growth lead to greater poverty!

  2. Rhonda Kovac
    September 11, 2018 at 1:20 am

    The most important overall point, which Patrick Newman’s comment supports, is that these metrics — GDP and the unemployment rate — bear little relation to economic success.

    Vast numbers of the employed are underemployed. Among these, millions are “working poor”, holding a job but still living in poverty. 95% of the profits from ‘growth’ go to the top 1%, not even touching the vast majority of people.

    And this is not even to mention that continued dependence on growth is leading us briskly to ecological catastrophe.

    Far more important is to challenge the current mis-use of these wildly over hyped metrics rather than to worry about what may or may not have contributed to them.

  3. Edward Ross
    September 11, 2018 at 9:35 pm

    What concerns me here is both merijnknibb and the comments seem to place some credibility on D Trump’s assertion’s based on the mythical (3.9%). From my simple point of view his whole hypothesis fails when the missing 15.9 million is considered. But then dare say it I am not an economist, just an ordinary person in the real world. Ted

  4. Helen Sakho
    September 13, 2018 at 11:55 pm

    The bigger the lie, the easier it is to sell, particularly in the realities of TV shows today. Ted, ordinary learned people do not appear on the TV. They do live in the real-real world and see and experience the floods, the fires, the despair, the poverty and the agony of ordinary people. I am glad you are not an economist. You are obviously an honourable contributor, which is more than one can say about most mainstream economists, no offence to anyone who is also a contributor to this blog. I know none belong to that stream, otherwise I would not participate here.

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