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Revised 2018 Jobs Numbers Show Why Trump’s Been Pushing Fed Hard To Slash Interest Rates

By  James Barrett
WASHINGTON, DC - AUGUST 21: U.S. President Donald Trump speaks to the media before departing from the White House on August 21, 2019 in Washington, DC. President Trump spoke on several topics including the U.S. economy and why he canceled his trip to Denmark.
(Photo by Mark Wilson/Getty Images)

In what is the largest such revision in a decade, the government’s estimate of the total number of jobs created in 2018 was slashed by about half a million this week.

“The economy had about 501,000 fewer jobs as of March 2019 than the Bureau of Labor Statistics initially calculated in its survey of business establishments,” Market Watch reports. “The average 223,000 monthly increase in employment in 2018 — the strongest in three years — could be trimmed to 180,000 to 185,000, economists estimate.”

According to Oxford Economics Chief Economist Gregory Daco, the slashed estimate is the largest revision since 2009. The largest reductions were in leisure and hospitality, revised down by 175,000 jobs, professional and businesses services, slashed by 163,000, and retail, dropped by 146,000. Daco predicts that the “maturing labor market will mean less job growth going forward.”

The big takeaways from the revision, according to Market Watch’s Jeffry Bartash, are that Trump’s trillion-dollar tax cuts were not as effective in creating jobs as initially believed and that the economy is not quite as healthy as early numbers indicated. Bartash, however, suggests that we might see an upward revision of wage growth, noting the 3% increase estimate for last year is a “surprisingly modest increase given that the unemployment rate stands near a 50-year low of 3.7%.”

The revised jobs numbers suggest that Trump’s call for the Federal Reserve to cut interest rates might be a wise course of action.

Trump has been hammering that issue repeatedly in recent days. As reported by CNBC Wednesday, Trump has been calling on the Fed to take more dramatic action since its last meeting, when it cuts its benchmark interest rate by 25 basis points. That reduction wasn’t nearly enough for Trump, who called this week for “a full percentage point reduction and even brought up the idea of more quantitative easing, or asset purchases the Fed made to pull the economy out of the Great Recession,” CNBC notes.

On Wednesday, Trump posted a series of tweets ramping up pressure on Federal Reserve Chair Jay Powell to slash interest rates.

“Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He’s like a golfer who can’t putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT — but don’t count on him! So far he has called it wrong, and only let us down,” Trump wrote (tweets below). “We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, ‘highest Dollar in U.S.History.’ No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!”

“So Germany is paying Zero interest and is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest and just stopped (I hope!) Quantitative Tightening. Strongest Dollar in History, very tough on exports. No Inflation! WHERE IS THE FEDERAL RESERVE?” he wrote in follow-up posts.

Trump continued to ramp up pressure on the Fed early Thursday, tweeting: “Germany sells 30 year bonds offering negative yields. Germany competes with the USA. Our Federal Reserve does not allow us to do what we must do. They put us at a disadvantage against our competition. Strong Dollar, No Inflation! They move like quicksand. Fight or go home!”

Trump also offered some reassurance to Americans, tweeting out a quote from Commerce Sec. Wilbur Ross about the overall health of the economy: “Tax cuts, deregulation, and an Administration dedicated to growing business have allowed the U.S. economy to flourish. The resulting surge in job creation and record low unemployment has put the American worker in the driver’s seat.”

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