MAGAnomics – Jobs, Jobs, Jobs – June Payrolls +224,000, Unemployment 3.7%, Private Wage Growth 3.2%…

Apparently the rumors of our economic demise were greatly exaggerated.  Yes, amid the gnashing teeth of the Wall Street pundits hoping for another lucrative Fed rate decrease, the Main Street economy continues to defy expectations:

“Today’s jobs report shows the U.S. economy continues to create jobs at a strong pace even as we enter the longest period of economic expansion on record.” ~Tony Bedikian, Citizens Bank.

According to the BLS Report – June saw 224,000 jobs added; and importantly the private sector wage growth knocks a very solid +3.2% year-over-year. [Table B-8]  You might remember in the May 2019 jobs report 299,000 people moved from Part-Time to Full-Time employment.  In today’s report total payrolls added another 224,000 workers.

These are stunningly numbers.  The 224k new jobs this month is higher than same month last year (2018).  The Main Street economy is continuing to expand.  Private sector growth in wages continues to run above 3% for the 11th straight month.   Wage Growth is a critical driver because over inflation is around 1.3%. Wage growth is more than double inflation.

Key Point: Economic numbers, statistics, are subject to narrative engineering.  Those pushing a negative economic narrative are Wall Street pundits.  Wall St. has a self-interest to push negative economic news to get lower interest rates.  Lower interest rates means cheap money and a higher stock market.

Having said that we can see why Wall Street doomsaying has an inherent motive.  Wall Street wants lower interest rates to make money from borrowing.  However, President Trump also wants lower interest rates for a different reason.

President Trump wants lower interest rates to offset Chinese and EU currency manipulation which is intended to keep their exports cheap and battle Trump’s tariffs.

Wage Growth.  Private Sector wages grew at 3.2%.  [Table B-8]

Overall wage growth of 3.1% is very strong.  Private Sector wage growth of 3.2% is even better, and driven primarily by increased wages in “non-supervisory” payroll; ie. the actual workers (non mgmt). June was the 11th straight month with annual wage gains of at least three percent. Wages for non-supervisory workers continue to rise at a faster rate of 3.4 percent.

With inflation remaining low (1.3% in June); and assuming inflation is relatively unchanged in July; the 3.4% non-supervisory wage growth, at current wage rates, is equivalent to over $900 per year in real wage growth for a blue-collar worker at 40 hours per week.   In may regions of the country these excellent results are actually the low-end.

There are massive parts of the U.S. where the labor market is so hot wage growth is far higher than the national average.  It won’t surprise anyone to hear those areas of highest growth are the same areas where prior economic, trade and manufacturing policy had a negative effect.

President Trump is the blue-collar president.

Since the mid-to-late 1980’s the U.S. economy split into two divergent economic engines. One traditional engine powered by Main Street, and a second engine powered by Wall Street.  For thirty-plus years the distance between those engines was growing as federal monetary policy provided low interest rate support for investment, but the end destination for the investment was NOT in the U.S. [Hence, globalism]

For more than 30 years monetary policy has been driven by Wall Street influence.  FED interest rates made borrowing cheap, but the money -the actual investment itself- flowed out of the United States.  The end product from the investment, steered by multinationals, created products overseas.  Within this flow of capital there was no benefit to Main Street.

President Trump’s America-First policy has reversed the dynamic.   As a result of his focus and demand, the end product(s) from capital investment are now here in the U.S.A.

The MOUSE is money or investment. The CHEESE is end products, manufactured stuff.

Rather than beg the Wall Street investment mouse to change direction in the manufacturing maze, president Trump has simply moved the cheese to Main Street.  The mouse’s travel changed accordingly.

(BEA Table 4 – pdf)

The price index for gross domestic purchases increased 0.7 percent in the first quarter, compared with an increase of 1.7 percent in the fourth quarter (table 4). The PCE price index increased 0.4 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.0 percent, compared with an increase of 1.8 percent. (link)

As companies reevaluate the best place for investment (highest return), and they see that Trump’s policies (corp taxes, tariffs, material and labor costs) focus on greatest benefit being inside the U.S, then companies return to Main Street.  This is what has been happening since Trump took office; and it continues through today.

The prices of highly consumable goods (food, fuel, energy) is kept low by Trump policies  that increase energy production and return a genuine supply-side dynamic to domestic production prices. [The battle with Big AG]

Meanwhile multinationals, and some foreign governments, fight to keep their footing abroad (original investment) by keeping down the price of durable goods manufactured overseas.  This is done by increase productivity, adjusted supply chains and retention incentives afforded by the benefiting nation.  This is done to offset Trump tariffs which are designed to influence a shift in the manufacturing process.

The end result of both production dynamics, domestic and abroad, is low inflation.

This price dynamic is happening at the location of output, internally to the operations that are determining the output price, based on their determination of what U.S. market prices will absorb.

Key Point – The pricing is NOT a result of decision-making on new investment; and therefore the pricing dynamic is not able to be impacted or influenced by FED monetary policy.

Only when the majority of manufacturing investment fully returns to the U.S. will FED policy have any significant bearing on manufacturing prices.  This is the parity point where Main Street’s economic engine is recoupled to inflation.

There was 30 years of distance in the FED disconnect, and it will take more than a few years for the recoupling of Main Street to FED monetary policy.

MAGA, bitches.

We are the elites now!

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This entry was posted in Big Government, Big Stupid Government, Donald Trump, Economy, media bias, President Trump, Taxes, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

48 Responses to MAGAnomics – Jobs, Jobs, Jobs – June Payrolls +224,000, Unemployment 3.7%, Private Wage Growth 3.2%…

  1. I guess someone forgot to tell the last administration (can’t remember the name) that magic wands really do exist. It’s called knowledge gained from hard work, blood, sweat and tears, and actually having skin in the game. It takes a REAL business man to understand this. Not academic models.

    Liked by 20 people

  2. gingergal says:

    We are waiting for the feds to lower the rates. Right now we’re at 5.6% on our mortgage. This fall we’re planning to refinance and that will cut 150,000 dollars off of interest, not to mention around 250 per month if we can get it down two percentage points. Might even wait until next spring, but we want to jump immediately because of how fast things can change and the feds seem bent on high interest.

    Liked by 3 people

    • permiejack says:

      Gingergal and it’s not just your debt. It is government debt as well. 500 billion per year just to service our current debt. Government debt needs to be rolled over and rolling it over at lower rates helps tremendously. More people working also helps with the debt by creating more tax revenue.

      I hope this becomes a campaign issue as the democrats want to create more debt, more tax burdens with their free everything campaign. Educating Americans on this issue is the most difficult part. Thanks to Sundance educating us on this and keeping it at the forefront and to our president for creating the solutions.

      Liked by 3 people

      • dallasdan says:

        “Government debt needs to be rolled over and rolling it over at lower rates helps tremendously.”

        “Educating Americans on this issue is the most difficult part.”

        Excellent points.

        The former is not intuitively obvious to most Americans because they don’t have the knowledge or inclination to understand the dynamic of debt being constantly re-financed.

        IMO, the latter contains a significant impediment to attaining buy-in from the large number of older investors whose retirement portfolios are overweight with fixed income investments. For many of them, capital preservation is a higher priority than capital appreciation, given that the latter requires assumption of greater risk. Hence, many of them shy away from most equity investments that can decline rapidly due to seriously negative, unforeseen economic and political events world-wide. Additionally, they don’t have an extended time horizon for regaining substantial losses, and/or simply cannot afford to suffer them in any significant amount.

        Reduced Fed funds rates clearly help grow the economy for the greater good. The President knows this, and he is focused, appropriately, on the greater good. Unfortunately for fixed income pensioners and investors, lower risk, highly-rated investments yield lower returns as money becomes cheaper.

        I make these observations only to highlight the feelings I hear frequently from older patients who fear their nest eggs will not sustain them unless they jump into the equities markets hoping to profit significantly and have to carry the burden of worrying daily about things over which they have no control.

        Portfolio diversification and low beta values are legitimate tools for minimizing the relative negative impact of suddenly declining equities markets, but the absolute value of lost personal wealth in such times can be devastating to many.

        Moreover, many feel they have missed the multi-year window of investment opportunity, one that could have been suddenly slammed shut for any of numerous reasons, and are now reluctant to buy-in “at the top.”

        Financial planning for most very mature people is a very significant challenge.

        Liked by 2 people

    • dufrst says:

      Mortgage rates are in the 3s now, what are you waiting for? I don’t think the Fed will cut (they should). Let’s see GDP numbers for 2nd quarter later this month before we proclaim a Fed rate cut. That number would have to be lower than expected to move this Fed to cut rates in my opinion.

      Liked by 2 people

    • Bert Darrell says:

      Gingergal: since you mentioned that your current mortgage is at 5.6% interest I assume it is a 30-year mortgage. Please, allow me to SUGGEST to never again get a mortgage that is for more than 15 years.

      Keep in mind that the front payments are much more interest than repaid principal. Therefore, if you refinance in less than 15 years your will essentially still owe close to the initial principal amount borrowed. Banks know that the average home is sold within 10 years. So, they collect mostly interest during those 10 years and, when you refinance, you still owe a big bundle. This whole “legal scam” is compressed when your mortgage is for 15 or less years, and you come way ahead of the unavoidable mortgage game.

      Of course, if you cannot afford the slightly higher payments typical of a 15-year (despite the lower interest attached to these shorter-time mortgages), and want to “own” a home, you must play the bank’s game.

      Liked by 4 people

    • Kintbury says:

      Ask about buying down your interest rate too. The cost may be worth it but only if you plan to stay in the home. Just a suggestion as I am not a professional but have brought a few homes and refinanced plenty.

      Like

    • acenypd says:

      Immediately??? Mortgage rates have been under 5% since at least 2012 when I refinanced from 6% to 4%. Do it as soon as possible. It’s throwing away money every month you wait.

      Like

  3. What Trump is doing to/for the economy is divine, just as the MAY 15TH PROPHECY proclaimed with 100% ACCURACY!

    Liked by 2 people

  4. Marygrace Powers says:

    “President Trump is the BLUE COLLAR PRESIDENT.” sd

    ……FINALLY OUR PRAYERS ANSWERED BIG LEAGUE.

    Liked by 4 people

  5. TwoLaine says:

    Oh darn, and just this week (after the housing #s) they were hoping for another recession. Liberal heads exploding everywhere, just like the 4th of July! 🙂

    Liked by 5 people

  6. Chuck says:

    The economy is what wins elections.

    Liked by 1 person

  7. Dee Paul Deje says:

    There goes POTUS waving that magic wand again.

    Like

    • Donald says:

      ‘He’s got the whole world, IN HIS HANDS’
      ‘He’s got the whole world, IN HIS HANDS’
      ‘He’s got the whole wide world, IN HIS HANDS’
      ‘He’s got the THE WHOLE WORLD IN HIS HANDS’

      Liked by 2 people

      • Bert Darrell says:

        Let’s see. If 0bama had the magic wand required to create jobs and revive the economy, he lied to us (again) so he could keep the economy down and take us a step forward towards executing the Alinsky project. Shoot! This man (if he is one?) just lies and lies. If he wasn’t lying then he was just incompetent. What a dilemma!

        Liked by 2 people

  8. dufrst says:

    “I will be the greatest jobs president that God ever created!” – Donald J. Trump

    MAGA!!

    Liked by 2 people

  9. Dee Paul Deje says:

    MSM: “Jobs, Jobs, Jobs. Dammit.”

    Like

  10. SHV says:

    But..But…Orange Man Bad….Trump economy for the rich…Democrats support the common man!…

    I remember when Jimmy Carter, Democrat Paragon of the common man was President and my home mortgage was 16.8% and I had to wait in line for an hour to buy 10 gallons of gas.

    Liked by 5 people

    • rashomon says:

      How quickly they forget. The millennials know nothing about this as such economic history is not taught in schools. In fact, economic history has neveh been taught in school. One has to search out such f.a.c.t.s.

      Liked by 1 person

    • rustybritches says:

      We lived In Nevada at the beginning of that time and it took us some times all day and sometimes not at all to get gas to go to work and school and then we moved to Arizona Where we took out a loan on a new van and it was 21.5% and that lasted until President
      Reagan came into office glad that time is behind us Only two bad Presidents that I can remember in my life time Carter and Obama

      Liked by 1 person

  11. Perot Conservative says:

    – Several large tech companies (HP and Dell?) moving out of China.

    – $240+M soy purchase by China; and first China rice purchase from California.

    I believe ratification of USMCA, combined with a possible Japan deal, will be a critical turning point. For corporations, for possible tariffs on India and Vietnam (unless they wake up early).

    Policy wonk analysis by Alan Tonelson of the new manufacturing numbers below. Five year suppression of ag prices, housing slowdown and Boeing aircraft problems come into play.

    https://alantonelson.wordpress.com/2019/07/05/whats-left-of-our-economy-is-manufacturing-hiring-any-trade-war-problems-out-of-the-woods/

    Like

    • rashomon says:

      Tonelson stopped me with “…the Financial Times, a newspaper I genuinely respect…” as it has been intellectually dishonest as lone as I can remember — and I’m reeeeeealy old.

      Liked by 1 person

    • Dennis Leonard says:

      This says everything about the article”Policy wonk analysis by Alan Tonelson”.Next time link to this”Policy wonk analysis by Sundance”

      Like

  12. Donald says:

    ‘He’s got the whole world, IN HIS HANDS’
    ‘He’s got the whole world, IN HIS HANDS’
    ‘He’s got the whole wide world, IN HIS HANDS’
    ‘He’s got the WHOLE WORLD IN HIS HANDS’
    !!!!!!!

    Like

  13. chojun says:

    I posted the following earlier. Thanks to the excellent CTH research and explanations, I couldn’t help but laugh this morning when strong jobs reports were met by a selloff in the markets.

    This tells me that the disconnect between Wall St. and Main St. is nearly complete. As Sundance indicated above, it appears that the better investment now is directly with businesses and less with the markets that speculate on them.

    I have to imagine that hedge fund managers and investors are having a tough time sleeping, lately.

    Liked by 3 people

    • rashomon says:

      Sometimes it’s just the computer algorithms. All the traders I know are on vacation today. Too hot, too rainy, too humid, too earthquaky, too much 4th celebrating to go to work. But all those advertisers need click bait.

      LOL? Maybe not.

      Liked by 1 person

      • Dennis Leonard says:

        Right on the first one,click bait.

        Like

        • Dennis Leonard says:

          No it is not because of pay walls,they are becoming irrelevant,
          ““The consultancy Challenger Gray & Christmas reported this week media companies, which include movies, television, publishing, music, and broadcast and print news, announced plans to cut 15,474 jobs so far this year, of which 11,878 of which were from news organizations” reports AFP.

          This is a huge increase over 2017’s 4,062 media job cuts and, according to the article at least, this is primarily happening due to paywalls and ad revenue.”

          Like

    • dallasdan says:

      IMO, Wall Street has never operated with either objectivity or honesty. I strongly suspected that before working there for four years after graduating college. It took no more than six months on the job to confirm my suspicions. I stayed only long enough to pay my undergraduate student loans, and then escaped the cesspool and found salvation by going to medical school.

      The best advice I received before my employment began was, “Beware of ‘the Street.’ It is the world’s biggest casino and the house is always the long-term winner.”

      Liked by 4 people

  14. Californian7 says:

    I think the article is incomplete if it doesn’t mention the effects of tax policy on this process. Many decisions, both manufacturing and service-related, are made to minimize the tax burden on our businesses and investors. Equipment purchasing, hourly wages, etc. are affected by things like healthcare mandates, tax policy, and the villianization of productive members of society by government leaders – thankfully, this President doesn’t do that.

    Liked by 1 person

  15. Joe Blow says:

    Yet a traveling circus of 25 democrats can traipse around the country wailing that this economy isn’t working for anyone but the “1%” and there are people brainless enough to believe them.

    Like

  16. FL_GUY says:

    I want to give a personal observation on how the economy is improving. Lately, there are help wanted signs in most convenience stores, fast food places and grocery stores. Now, that practically NEVER happened under the eight year reign of terror by Obozo.

    What does this mean? To me, it means that their personnel have moved on to better jobs leaving a lot of vacancies, better jobs that only exist now because of President Trump.

    See if you notice the same trend where you live.

    Liked by 2 people

    • NC Mom says:

      North Georgia/Western NC here. Doing my own research since May: Openings everywhere in retail/fast food/quick stops. The employees I do encounter all look very young to me…so to be sure I ask: Are you out for the summer?? Almost ALL of them are rising Seniors in HIGH SCHOOL. 2 were rising juniors. That is a sea change from 2 years ago when there were a lot of millenials and recent COLLEGE grads in these jobs. That says it all doesn’t it!!??

      Liked by 3 people

      • That’s actually who is supposed to be filling those jobs. First jobs for first time workers, high school and also college students. That’s good to hear. I’m in Western NC also.

        Liked by 1 person

        • And that is who the minimum wage is designed for. The exceptions are people unable to pass a drug test, an ex con, or the mentally slow.
          In a good economy, the good workers get raises or change jobs. Depending on how good a worker they are, this is also true in a bad economy.

          Like

  17. Charles says:

    Bringing manufacturing back to the U.S., who would have thought it? Go go President Trump.

    Like

  18. Pete says:

    I just wish that retirees on Social Security can catch up from past year’s low inflation because of zero cost of money that kept the Obama-Biden economy afloat. The President can’t continue to ignore retirees who have suffered long enough.

    Like

  19. TreeClimber says:

    Excellent news, truly excellent.

    Now, let’s have someone save our contract workers – the ones who do hard manual labor for minimum wage or less, don’t qualify for overtime pay but are required to work overtime, get screwed out of workman’s comp, get used and abused and treated worse than the machinery. The ones who got suckered or forced onto the evil carousel of staffing companies and contract work and now nobody wants to be bothered to help them get off and into permanent jobs – let’s turn our attention to them.

    Like

  20. Trump Train says:

    but the experts.

    Like

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