Economist Peter Morici analyzes the recent jobs report, noting 178,000 new positions and a drop in unemployment to 4.3%, yet warns that job creation has slowed to 25,000 monthly under President Trump compared to 135,000 previously. He argues the economy is effectively shrinking if health care jobs are excluded and criticizes the administration's budget as a wish list assuming 3% growth to fund a $1.5 trillion defense increase without matching social program cuts. Morici cautions that sustaining 7 to 9 percent GDP deficits risks international borrowing concerns, concluding that political unwillingness to reduce Social Security makes his proposed fiscal path unlikely to succeed. [Automatically generated summary]
Unemployment ticked down from 4.4% in February to 4.3% in March, and average hourly earnings increased 0.2%.
What stuck out to you?
unidentified
Well, the fact that the economy seems to be in neutral.
We had a big number this month that was up, but we had a big number last month that was down.
Saul Witten evaluated the entire Trump years so far.
And during the first Trump and Biden administrations, the economy pretty steadily created about 135,000 jobs a month.
We had COVID, but we made up for it shortly after it.
Since President Trump has become president again, it's like about 25,000 jobs a month.
And more of those are in health care than anything else.
If we subtract health care, then the economy is actually shrinking in terms of jobs.
So we're not making good progress that way.
Now, granted, we have fewer people that we have to employ because we have fewer Indigenous Americans becoming 18, and we have fewer immigrants because of his deportation policy.
But still, to stay even, we should be creating 50 or 60,000 jobs a month on average.
So you say to me, well, how can the unemployment rate go down?
Well, the answer is this is a very discouraging job market.
25% of the people that are unemployed have been unemployed more than six months, and a lot of people have given up and sat down.
The labor force shrunk last month.
And we compute unemployment by dividing the number of people that are actively seeking by the labor force, which is the number of people actively seeking plus those that are actually employed.
So, you know, the numbers, you have to take them apart to see what is really a rather unfortunate situation.
Another point with the numbers, and every time a jobs report comes out, people who follow them might know this, but there's always a revision for the previous month.
And so in February, 92,000 job losses were revised again to 133,000, and the January numbers were revised up to 160,000 from the initial point of 130K.
The Trump administration was celebrating yesterday's jobs report.
Do you think it's fair for them to celebrate it?
Or with those revisions?
unidentified
with every president, whether they're Republican or Democratic, whether they're radical or moderate, they celebrate good numbers and they have an alibi for bad ones.
It's politics.
It's just the way it is.
But this administration's economic policy is a scattershot as its strategy for prosecuting the war.
Yesterday's budget was terribly discouraging to me.
I have been a big advocate for quite some time of spending more on defense.
Knowledgeable people in the defense establishment say that in order to meet our commitments in Europe and in Asia and the Middle East, we need to spend 5% in GDP on defense, and this gets us closer to that.
I mean, it gets us pretty close.
It's basically going to go from about $1.1 trillion to $1.5 trillion, about.
But it doesn't make hard choices.
We already have a 6% GDP budget deficit.
So he basically assumes that the economy is going to grow at 3% instead of 2%, and that makes it go away.
Because the cuts he outlined were more political, more ideological than they are large in terms of the money that you save.
That does save some money, but not nearly the increase in defense spending.
When it comes to the president's budget request, and folks could tick through, they could see it online, I think it's a reminder, and I try to remind myself, even as somebody who covers the White House and Congress, that it's essentially a wish list from any president to Congress, and Congress will ultimately determine what pans out.
When you look at the top lines, especially when it comes to defense spending, do you think this current Congress, which has struggled to do much of anything, will be able to meet the President even halfway of what he's looking for?
unidentified
Oh, I think this present Congress can do that simply because the Republicans will do it through reconciliation.
However, what they're unwilling to do, and this president is unwilling to do, is he's as unwilling to cut back on social spending so we can accommodate more defense spending as Kamala Harris would be.
No one wants to disappoint people.
And we're getting to the point where we're just out of money.
You know, we cannot have budget deficits that are 7, 8, 9 percent in GDP without at some point the world saying halt.
Because we basically finance these big deficits by borrowing from abroad.
It's a form of printing money.
And if you're going to have a bigger defense establishment, then you have to spend less money on something else.
And it can't come out of the general administration, the government, because, frankly, that's been screwed down for the last two decades.
I mean, you go into government offices, they're using 70s technology at times, floppy disks and so forth.
It's really not a good thing.
Now, he's cut back on the bureaucracy a lot, and that's nice.
But the big ticket items are how much we spend on social programs, how much we spend on Social Security, and things of that nature.