What Happened to Trump’s ‘Magic Wand’??
By: R Rice
Tags: Economics, Trump Administration, Magic Wand, Gdp Growth, Gdp

It has been an interesting 31 months in U. S. political and economic history.

As an impetus for these times, behind us and ahead of us, an Obama town hall-style broadcast on PBS in 2016 offered the perfect opportunity to grasp the reality of the times ahead on one specific area, manufacturing jobs.

If you listen carefully, the reference to a ‘magic wand’ is in how a segment of jobs within overall jobs, some very specific manufacturing jobs, would not reasonably be expected to return. These jobs would not return because of anyone’s ‘better deal’, or, their negotiating prowess.

A prime example of jobs that have failed, and, will continue to fail relates to the coal industry.

Trump, on the stump — “If they didn’t have ridiculous regulations that put you out of business and make it impossible for you to compete, I’m going to take that off,” Trump said to loud cheers. “You are going to be proud of me.

Maybe, that was the ‘magic wand.’

So, how’s that working out for Mr. Hard Hat up there?

Actually, it’s this very random rhetoric that has taken hold in the minds of many who refuse to grapple with reality. Just repeat ‘cut regulations’, and, all of this will go away.

As of January of 2019, more coal plants had closed during the Trump administration than during the entire Obama administration.

‘MAGIC WAND’??

Trump’s EPA — now led by former coal lobbyist Andrew Wheeler — recently moved to lift Obama-era caps on how much poisonous mercury and heat-trapping carbon power plants would be allowed to pump into the sky. The argument was that less regulation could boost the coal industry and perhaps lead to cheaper electricity.

Through it all, this ‘magic wand’ phrase has been co-opted, misused, misconstrued, misinterpreted, and, miscategorized into a variety of misunderstood economic realities, from total jobs, gross domestic product (GDP), stock market averages, etc.

Also in this period of time, a virtual army of Trump enabling media sources have offered plenty of wind for the sails of the mythical ‘Trump economy’, at least that part of his economy that was responsive to his so-called, ‘magic wand’, according to his enablers. This was, in theory, a product of the combination of his sheer gift as a business mogul, plus, that of his party’s ‘drain the swamp’ release of burdensome regulation, and, of course, the power of tax cuts. Let’s avoid any conflicts with history on this last item. It’s almost as if we hadn’t tried it before.

This week, after all of the huffing and puffing, reality arrived, with a bang.

This article establishes the strong parallels of the oil and gas industry to recent overall economic trends. This is the key to unlock the the truth to claims that the propaganda industry surrounding him would like to ignore.

To summarize, with over a year to go ahead of the political conventions, the hype has died, all the numbers weren’t real, and, the balloon has burst. This ‘train’ is going to need some help getting across the finish line.

‘MAGIC WAND’??

So, just how did this charade become so much to totally define the fabric of Trump, the GOP, and, it’s propaganda machine?

With regard to many sources of misinformation offered on these topics, I’ll simply focus in on one which grabbed my attention so rigidly.

Manufacturing Jobs

Recall that the original source of the ‘magic wand’ comment was with reference to *some* manufacturing jobs.

Here is an image of the overall share of manufacturing jobs to all jobs, as of this year.

Note, for future reference, in this article, and, for future use, that any claims, by anyone, of triple digit increases in manufacturing employment are pure fantasy. The share of manufacturing jobs to all jobs remains, through this summer, below 2008 levels, and, below every year even before 2008.

Last October, I noticed the headline for this next article in various media channels, from Twitter links to Investors Business Daily, and, also in Forbes.

These are just a few of the many sources that are relied upon by millions of people around the world for completeness, integrity, and, accuracy in their content.

My reaction to this headline was immediate disbelief. Of course, it was not my belief that really mattered. It was the result of my investigation into the falsification of the data behind it that confirmed my initial belief as being correct.

Notice the reference in this text to the same town hall meeting from the video clip above. Compare the context of the comment in the video to the impression that is attempted here.

After reading the entire article, I noticed one significant error in the presentation. There was no image included of this miracle recovery, or, boost in manufacturing jobs. Any increase of such a dramatic magnitude surely should be shown graphically with the net change over time.

Was this fantastic, 10x number timed to give the GOP a piece of ‘red meat’ rhetoric, just in time for the mid-term elections, when it could hardly be verified in time, before voting decisions were made? Of course not!!!

Incidentally, a quick Google check finds 189,000 results for the phrase ‘Trump manufacturing jobs up 10x vs Obama’. Guess where they got the idea?

Who Is Chuck Devore

Currently, he is a Vice President of the Texas Public Policy Foundation, a conservative think tank based in Austin, Texas.

Back in 2010, as a candidate for the U. S. Senate in California, the political action committee of the Tea Party Express hosted a “conservative Woodstock” event , where then-Orange County Assemblyman Chuck Devore was endorsed for US Senate in Searchlight, NV. Devore was one of the few politicians invited to speak at the event which starred ex-Alaska Gov. Sarah Palin and Joe the Plumber.

So, initially, I decided first to ‘grab a chart’ to help explain this amazing phenomena.

I found one here, also in a separate Forbes article, which was a broader view of the economic performance under the Trump administration. (I have annotated the key features as they apply to this evaluation.)

‘MAGIC WAND’?? I think I found it!

Recall that oil & gas industry jobs have heavily influenced overall jobs, and, manufacturing jobs, in the recent years.

Here are the facts on the state of disruption of manufacturing jobs within the past decade.

From the article — The stunning fall in oil prices, from a peak of $115 per barrel in June 2014 to under $35 at the end of February 2016, has been one of the most important global macroeconomic developments of the past 20 months. The sharp fall is broadly similar in magnitude to the decline in 1985–1986, when OPEC members reversed earlier production cuts, and in 2008–2009 at the outset of the global financial crisis. Understanding the underlying causes of price drops is essential to interpreting their macroeconomic effects. The 1985–86 decline was mainly supply-driven, while the drop in 2008–2009 was almost entirely due to a collapse in demand. The recent price decline appears to be a mix of the two.

So, how important is the oil & gas sector to the overall national employment picture?

The US oil and gas industry’s total employment impact to the national economy in 2015, combining operational and capital investment impacts, amounted to 10.3 million full-time and part-time jobs and accounted for 5.6% of total US employment, according to a study commissioned by the American Petroleum Institute and conducted by PwC LLP.

Further validation of the impact on the global oil slump on the positive and negative changes in manufacturing jobs, in this particular period in question, is evident here, from an entirely different source. Notice the specific reference to job losses in the window exactly two years before the Trump inauguration.

It’s clear that a below trend or above trend changes in employment in the oil and gas sector will have a substantial impact on manufacturing jobs, all jobs, and, gross domestic product.

Curiously, at some point in time, my original tweet, referencing Devore’s original October article, was removed from public view. Could it have been the creation of the #DevoreDeception hashtag that prompted his aggressive withdrawal from the smoke and mirrors?

An admission of the original error was most certainly best served by removing it from easy retrieval, and, thus, further misuse by an uninformed and unsuspecting public.

However, that was not to be the case in the entire context.

In February, now it’s at 6x!!!

“…under Obama’s last 2 years…”

Google finds 102,000 results for the phrase ‘Trump manufacturing jobs up 6x versus Obama’. Guess where they got the idea?

Another passage of time, some recalculating, and, a more ‘cherry-picking’ was at hand, for round three.

From the article — While overall employment numbers are comparable, the difference in manufacturing is profound. In the last 26 months of Obama’s presidency, manufacturing employment grew by 96,000 or 0.8%. In Trump’s first 26 months, manufacturers added 479,000 jobs, or 3.9%, 399% more jobs than Obama’s record.

For the record, this includes a period from November 2014 to December 2016 for the Obama presidency, with a global oil slump, and, January 2017 to March 2019 for the Obama presidency, without a global oil slump, or, any other extraordinary event of a negative nature.

For the record, the 26-month period used Trump’s manufacturing job growth included 1 period of negative manufacturing growth.

The 26-month period used for Obama’s manufacturing job growth included 8 periods of negative manufacturing growth. These 8 periods are clearly indicated in the chart above, entitled ‘Monthly Job Creation in Manufacturing’, that coincides with the global oil & gas sector slump. This looks exactly like the plot for 2016 on the ‘Manufacturing Jobs Added’ chart higher up on the page.

For comparison, the two previous 26-month periods in the Obama administration created 299,000 (ending October 2014), and, 415,000 jobs (ending October 2012), respectively, or, 211%, and 332% of the 26-month, Obama oil slump period, originally measured at October 2016.

Over a longer period of time, 8 years, the average annual manufacturing job creation rate is 145,444 jobs annually.

This looks exactly like the ‘Employment In Manufacturing’, January 1979 to June 2019, chart higher up in the page.

Devore’s math selects two of the lowest seven years of manufacturing job growth, and, attributes the change solely to current administration policies.

All five of Devore’s updates have carefully included these oil & gas sector slump aberrations.

Deliberately ridiculous!!!

From the article — Is it any wonder that President Obama derided then-candidate Trump for needing a “magic wand” to deliver on his manufacturing jobs promise?

Is it any wonder that, like the first article in October, this revised March article, and, the changes from 10x/6x, and, to an revised gain of 4x, measured the very next month, still cannot be taken seriously.

Google detects 32,000 results for the phrase ‘trump manufacturing jobs up 399% vs Obama’. Guess where they got the idea?

Now, we’re 600% off peak, in under 6 months.

Trends simply don’t work that way. Only aberrations work that way.

Here’s how the trends work. Notice the dark red line, below zero, on the left side of this chart of manufacturing employment. Notice how Devore’s references in every article, for the Obama administration, originate through lines that originate through this zone, from the oil sector slump.

Nevertheless, several more weeks later, another piece by Chuck Devore attempted to put a large gloss on a still developing picture, GDP, with full credit to the ‘fuzzy math’ of tax cuts and deregulation.

While adding a chart to emphasize the points, this time, the continued exclusion of the global impact on CY2015 and CY2016 GDP, and, by correlation, on all jobs, including manufacturing jobs, remains elusive in his explanation.

From the article — The economy grew at an average rate of 2.8% per quarter in the first nine quarters of the Trump Administration compared to 1.9% in the last nine quarters under Obama.

With that original chart for reference, the inclusion of the period of the oil slump, and, subsequent GDP revisions, tells quite a different story from the standard narrative.

From the article — The pace of economic growth is 45% higher so far in the Trump presidency than over the same timespan in Obama’s last 27 months in office.

We can safely assume that this economic growth change of 45% is also ‘reverse engineered’, through a similarly configured ‘magic wand’, from some suitably disadvantageous point on this chart above.

Yet again, using roughly the same periods, and, always including the period without mentioning the oil slump, another piece appears; for the fifth round, with the obligatory emphasis on ‘over Obama’. He dropped the bogus and precipitously declining percentage increase this time. I wonder why.

Because, trends do not work that way. Only aberrations work that way.

With apologies for understating the manufacturing jobs by 10,000, I should also note that the 314,000 jobs is intended to note additional jobs, rather than total jobs. Nevertheless, this does not change the intentional, misrepresentation of manufacturing job growth, indicating triple digit gains, and, due solely to policy differences.

The Bandwagon

Naturally, GOP politicians, and, GOP supporters far and wide, jumped on the ‘Trump Propaganda Train’ to borrow some of the ‘wind’ for their own sails, and, the now infamous, ‘magic wand’ propaganda finish.

Let’s ignore the fact that this July tweet was referencing a March article from Devore. If facts don’t matter, then, why should expired data make any difference. Just tweet it, and, see how many likes and retweets we can get.

Non-Farm Payrolls

In spite of the relentless use of what is commonly known as one of the ‘lagging’ economic indicators, there is an under-publicized deficit of -817,000 non-farm payroll jobs in the first 30 months of the Trump administration when compared to the last 30 months of the Obama administration. And, this is exactly how lagging indicators work. You don’t realize that they’re weakening until time has already passed by.

This chart is one month old. Job growth is now down 12.5%, under Trump.

This gap is increasing each month.

Someone should explain how a 10x, 6x, 399%, or, other epic or historic increase in manufacturing jobs would fail to translate into an overall, gradually deteriorating jobs picture.

Note — Non-farm payrolls for February and May this year each had less than 100,000 jobs created. This is the first time with two months in a six-month period with fewer than 100,000 jobs since 2011.

Gross Domestic Product (GDP)

Donald Trump on the campaign trail, and, afterward, along with the White House, on the topic of GDP, proclaimed, “To get the economy back on track, President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 percent annual economic growth.”

This was the White House message in January 2017. At that time, the International Monetary Fund, IMF projected U. S. GDP growth to be 2.3% for 2016 and 2.9% for 2017. The actual figures for 2016 and 2017 were 2.2% (lower by -0.1% ) and 2.9% (perfect estimate). One year later, IMF projected 2.7% and 2.5% for 2018 and 2019. The actual figures were 2.8% (higher by 0.1%) and 2.5% (perfect estimate).

CY17 — Q1 2.3%, Q2 2.2%, Q3 3.2%, Q4 3.5%

CY18 — Q1 2.5%, Q2 3.5%, Q3 2.9%, Q4 1.1%

Currently, IMF is projecting 2.6% and 1.9% for 2019 and 2020.

CY19 — Q1 3.1%, Q2 2.1%

First, let’s take a look at the realistic possibilities of that 4% promise.

The 100-year average for real GDP is 3.3%.

According to the IMF, growth in the advanced economies is expected at 1.8% and 1.7% in 2019 and 2020.

They estimate U. S. growth at 2.3% and 1.9% in 2019 and 2020.

So, I ask; why do so many Trump enablers actually believe that he has this proverbial ‘magic wand’ that would allow him, realistically, even during two terms, to advance U. S. GDP by over 20%, above the 100-year average, above both IMF global and U. S. estimates, and, directly opposite of the paths of declining global growth?

It’s really quite simple.

It’s a a false belief!

Clearly, this trend, shown by the red line, has seen a peak early in 2018, and, is nosing lower, right in line with the external, non-White House projections.

So, within four years, and no projections over 3%, what would have made the Trump White House offer such rosy projections?

Could it have been one of the key GOP talking points of the past 3 or more years? “Obama is the first president in history never to achieve 3.0% annual growth.” While that was, in fact, true at a time, to the GOP and Trump’s chagrin, Trump has now, as of last week, joined Obama as the next president who will not achieve 3.0% annual GDP growth.

No. There is no ‘magic wand’. There never was.

And, it is for that reason that many believe that this was the target, of the administration, and, of their handlers, regardless of the realities at hand.

The trail of propaganda related to GDP, both quarterly and annual, is an equally reliable source of false equivalencies, and, false interpretations.

Even very recently, it got even worse.

And, from the Texas Public Policy article ‘Making America’s Economy Great Again’, The tax code, as with the regulatory burden and lawsuit climate, does affect investment decisions which in turn drives job creation. Over time, all other factors being equal, these government policy choices add up.

And, that is exactly the kind of rhetoric that does not add up, with growth between 1.1 and 3.5%, while Federal debt increased by 17% in 2018 over 2017, and over 23%, so far, in 2019 over 2018.

You cannot have sustained growth by simply building upon higher levels of debt!!!

Until last week, many references existed, and even more were falsely touted, of how Trump economic growth was exceeding that of the Obama era.

For the record, there were 5 quarters in the Obama administration when quarterly growth exceeded 4%.

4.5% in Q4 of 2009,

4.6% in Q4 of 2011,

4.9% in Q3 of 2014, and,

5.1% in Q2 of 2014

As for 2018, a one quarter GDP sugar high for Q2, originally estimated at 4.1%, was later revised in July ’19 to 3.5%. That quarter was influenced significantly by artificially boosted shipments of exports, including oil, steel, aluminum, corn, and soybeans, just to beat late June/early July tariff deadlines; without that boost, GDP would have been close to, or, possibly below, the previous Q2 number of 2017 of 3%. Additionally, boosts came in higher by an amount expected from the tax cuts, which will cost us $1.2 trillion, and, which is simultaneously the biggest tax cut AND the biggest tax increase once revenues through FY 2027 are counted.

The original Q3 GDP estimate of 3.5, was downward revised to 2.9% in July 19'. It was also heavily influenced by these same artificially boosted, tariff-dodging, exports, along with related inventory adjustments.

Growth in the final three months of 2018, originally estimated at 2.1%, is now pegged at an annualized 1.1%, half the previous estimate and the slowest pace in three years, as consumer spending downshifted significantly.

Annual GDP for ’18, originally estimated at 2.9%, was subsequently revised to 2.5%, after a 2.8% rise in ‘17.

WHAT HAPPENED TO THE TAX CUTS?????

Tax cuts did several things:

added $1.84T to the deficits over the next decade

were a major contributor to the 17% 2018 deficit over 2017, from $666B to $779B

extended the stock market reach for all-time highs, from increased stock buybacks

decreased Federal revenues more than a percentage point below the 40-year average

collected an additional $93B in federal taxes from individuals; corporations paid $91B less

tax cuts DID NOT provide the investment surge, or, measurable boost to employment, growth, etc., that had been promised

WHAT HAPPENED TO THE BUDGET DEFICIT????

The charts below show the reductions in the budget deficits that began in 2013, and, continued until the middle part of 2016. Recall that this was the same period in which a global oil shock occurred, as those manufacturing jobs were pressed in to negative growth. Notice, however the rapid expansion of the deficits those comparing the Obama economic era to the current, seem to never mention.

The reasons are obvious. Exploding deficits are someone else’s problem. Just boast about the stats on hand that you want kept on the forefront.

Drown out the bad news, with fake news.

Also keep in mind on the second graph, of the budget deficit as a percentage of GDP, the 4.1% might not appear to be a figure of concern, until you consider that it’s normally times of economic stress that drives us further into the red, not times of record expansions, to which we now claim. This -4.1% of GDP is also in the upper 25% of all deficit figures, which is in total contrast to the so-called ‘good economic times’ in which we’re told that we’re now in.

The result of rising deficits and flattening GDP is very clear.

The U. S. is the only advanced economy with a rising debt/GDP ratio over the next five years.

Why are so many Trump enablers spending so much energy spinning falsely generated economic statistics, while at the same time, ignoring the impact of their runaway spending on the longer term national budget?

Quite simply, these phony puff pieces are designed to capture attention of somewhat inattentive and uninformed readers, with fantastically inaccurate sound bites that can be easily memorized, energized, and, repeated. The intent is to flood the airwaves and the internet with misleading information that takes additional time, like mine, to verify. This misinformation is also packaged to offer political advantage through those who are so energized and uninformed.

As Mark Twain said: ‘A lie gets halfway around the world before truth puts on its boots.’

THE BOTTOM LINE

Ultimately, who do we find behind this particular sequence of cheerleading?

Revealed: The Corporations and Billionaires that Fund the Texas Public Policy Foundation

A tax document shows that — surprise! — the influential right-wing organization is funded by the Koch Brothers, TXU, Exxon, State Farm Insurance, Big Tobacco, etc

According to the tax filings, TPPF gets a majority of its funding from a relatively small group of major corporations, conservative foundations and wealthy individuals with a financial interest in the type of policies that TPPF promotes. Altogether, the list of donors includes 129 individuals, corporations and foundations and totals $4.7 million in donations.

“Most think tanks work for their funders and TPPF’s donors are a Who’s Who of Texas polluters, giant utilities and big insurance companies,” said Craig McDonald, director of Texans for Public Justice. “TPPF is thinking the way its donors want it to think.”

Therefore, it should come as no surprise that contributions in media from sources like this would contain the predictable twists that the donors pay to see, in as many places as possible, timed for maximum impact, and, configured in print to have the desired impact on a broad geographical spectrum of readers, whether or not accuracy is the desired goal in mind.