News Reporter: Wonkbook: The economy President Trump loves looks a lot like the one candidate Trump hated

Monday, 3 July 2017

Wonkbook: The economy President Trump loves looks a lot like the one candidate Trump hated

The latest economic and domestic policy from Wonkblog

President-elect Donald Trump, left, and former president Barack Obama arrive for Trump's inauguration ceremony at the Capitol in Washington, D.C., U.S. January 20, 2017. REUTERS/J. Scott Applewhite

By Damian Paletta and Ana Swanson

President Trump promised an economic boom, and he says it has already begun, touting a bubbly stock market and commitments from high-profile companies to speed up hiring. But beneath the bravado, ominous signs reveal a still-sluggish economy that is unlikely to take off any time soon.

"Stock Market at all time high, unemployment at lowest level in years (wages will start going up) and our base has never been stronger!" Trump tweeted Sunday night, following Monday morning with: "At some point the Fake News will be forced to discuss our great jobs numbers, strong economy, success with ISIS, the border & so much else!"

Trump is correct about the stock market and declining unemployment, which currently sits at 4.3 percent. Business and consumer confidence is high, though both have cooled a bit. Companies are announcing plans to expand and add jobs, such as Samsung's announcement Wednesday that it would create almost 1,000 new jobs over the next three years with the construction of a new facility in South Carolina.

But other trends are more worrisome. U.S. factory output fell in May, the second decline in three months, due in part to a drop in the production of automobiles. New orders for durable goods, such as furniture, electronics and appliances, were down 1.1 percent, more than expected. And housing starts — the construction of new homes — fell to an eight-month low.

Job and wage growth remain steady and underwhelming. The 362,000 jobs added between March and May is the fewest during a three-month period since mid-2012. And instead of rampant hiring, a number of companies have announced layoffs in recent weeks, including Ford, General Motors, Kellogg's, and Sears.

And overall, the economy Trump is overseeing as president looks a lot like the one he lambasted as a candidate: a slow, largely steady grind that has chipped away at the damage done by the 2008-2009 recession but that has been insufficient to usher in a new era of prosperity.

Is it inequality of income we care about — or inequality of opportunity?

By Steven Pearlstein

Inequality may well be the issue of our time. But is it inequality of income we care about, or inequality of opportunity? And what is opportunity — the opportunity to do better than our parents, or better than ourselves at an earlier age, or does it mean doing better relative to everyone else? Can some of us get wealthier without making others poorer? Would inequality recede if we just had more economic growth?

These questions animate two new books. One is "Dream Hoarders: How the American Upper Middle Class is Leaving Everyone Else in the Dust, Why That is a Problem and What To do About It," by Richard Reeves, a British-born philosopher by training, politician by instinct and a Brookings Institution social scientist by trade. (Richard is also a friend). The other, "The Broken Ladder: How Inequality Affects the Way We Think, Live and Die," is by Keith Payne, a professor of psychology at the University of North Carolina. Both books are authoritative, thought provoking, accessible and well worth a spot on your summer reading list.

Reeves starts from a simple factual observation — namely, that the rise of inequality in the United States isn't just a story about the super-rich, the top 1 percent, but even more about a class of married, highly educated, influential and increasingly isolated professionals in the top 20 percent who have been pulling away, both literally and figuratively, from the rest of the country.

Or, as Reeves is quick to acknowledge, people like himself and his friends. While to the world, and to themselves, it appears that the members of the upper middle class have come out on top because of their talent and hard work, Reeves reminds us that it has just as much to do with the luck of being born to parents able devote time, money and influence to develop and nurture their talents and assure their success.

Now, in the new age of inequality, that meritocratic elite is using its increased wealth to perpetuate that advantage for their children by segregating them in the best communities, sending them to the best schools and securing for them the best internships. As a result, Reeves writes that what started as an income gap in one generation is turning into an opportunity gap in the next, creating an American class system that "is functioning more ruthlessly than the British one I escaped."

Read more on Wonkblog.

Wonkbook is off tomorrow. Thanks for reading and, to all, a happy Fourth of July to all.

Most Recent Posts from Wonkblog

The economy President Trump loves looks a lot like the one candidate Trump hated

Trump's upbeat tweets notwithstanding, the country's economic performance is falling short of what he promised.

By Damian Paletta and Ana Swanson • Read more »

Is it inequality of income we care about — or inequality of opportunity?

Books like "Dream Hoarders" and "The Broken Ladder" demonstrate how much more interesting and enlightening the inequality debate has become

By Steven Pearlstein • Read more »