The biggest problem facing the U.S. economy

Friends,

The Labor Department reported this morning that the United States added 162,000 jobs in August. That’s more than expected, especially given how few jobs the country has added over the last few months.

But I want to let you in on a little secret (which shouldn’t be secret): Monthly jobs reports are now barely worth the paper they’re printed on because the Bureau of Labor Statistics has so little experience dealing with a labor market suddenly depleted by Trump’s mass deportations and the almost as sudden retirement of the giant boomer generation. In other words, much of what the BLS is now trying to do relies on pure guesswork.

But there are three real reasons to be concerned:

1. Wages. prices continue to rise faster than wages — which means most Americans are getting poorer. Average hourly earnings rose by just 10 cents, or 0.3 percent, for the month. That brings the year-to-year increase in hourly earnings to 3.1 percent. But prices have risen 3.4 percent over the year. Ergo: Most hourly earners are getting poorer.

It’s no big deal to create a lot of low-wage jobs. In fact, it’s absurdly simple. It requires only that employers keep a lid on wages as they raise prices. Presto — they make more money.

But Americans need jobs that pay more — at least enough to afford to pay the rent, mortgage, put food on the table, gas in the car, and care for the kids or elderly parents. The affordability crisis that Trump poo-poos is real, and Republicans will pay a hefty price at the polls for ignoring it.

2. Job stagnation. Another concern I have is that while employers aren’t firing many workers, they’re also not hiring. A low-hire, low-fire labor market doesn’t create opportunities for advancement. It’s also difficult for young people to get into.

A stagnant labor market is better than one that’s losing jobs but not much better.

3. Trump. He’s interfering in the jobs market and the economy in ways will make things worse. Bad enough that he’s trying to wage a costly war in Iran and impose costly tariffs around the world — both of which are driving up prices.

He’s also making really, really stupid threats. He responded to today’s jobs number by threatening that if the Federal Reserve didn’t lower interest rates, in the wake of a new spike in the US trade deficit, he’d impose embargoes on unfavored countries:

“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

Obviously, he’d like the Fed to lower rates to give the economy a boost just before the midterms. But lowering rates would surely open the gates to further price increases. In fact, today’s jobs report increased the odds of a rate hike because it removed the major objection to it — that it would stifle employment growth.

But his comment raises the larger question of Trump’s sanity. The very notion of ending trade with all countries from whom we buy more than we sell — a very large portion of the world — is absurd. Anyone with a fifth grade education understands why a country trades with other nations, and that a trade deficit itself is never grounds for stopping trade.

Who the hell is advising Trump on the economy? Scott Bessent is proving he doesn’t know squat about the economy, and there seems to be no one else around the Oval Office who does.

The biggest problem facing the U.S. economy right now is Trump.

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