Economy

Under Trump Inflation and Unemployment Will Soar, Here Is Why That Is a Good Thing

People don’t usually consider inflation and unemployment numbers going up as a good thing, but this is after 8 years of Obama.  Let me explain.  Let’s start with unemployment.  With 95 million people out of the workforce, the Obama administration brags about their job creation.  Since there are few if any jobs people have gotten discouraged and quit looking for work and are no longer counted as unemployed.  But if you check the secondary number, the U6 unemployment rate, it’s not dropping much.  And the U3 number that’s released every month is based on new jobs.  Although they are new jobs, they are not ‘net’ new jobs.

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Let’s say ‘company A’ goes out of business and in doing so has to lay off all of its 100 employees. Then, ‘company B’ comes along and replaces ‘company A’ but it only has 80 employees. The new jobs will list as 80 but the net new jobs is really minus 20.  Also, under Obama and mainly because of Obamacare many new net jobs are due to companies making all of their employees part-timers who are not eligible for Obamacare.

Already under Trump tens of thousands of jobs are being saved and created.  As this continues all of the people who became discouraged will begin looking for work again and will be counted as unemployed again.  That will raise the unemployment number.  Liberals will try to use the rise to make it appear that the economy is worse, but you and I will know better.  We will be able to see the job numbers increase.  Right now, the job numbers run from 150,000 to 200,000.  We need to create 160,000 jobs a month to keep up with the population increase.  Watch those numbers rise as Trump rolls back regulations and make the country business friendly again.

There are two reasons that the inflation numbers have remained low.  The Fed keeping interest rates artificially low in order to make it seem the Obama economy is better than it really is.  Notice the Fed just raised the rate as Trump takes office and they are promising 3 more increases in 2017.  The second reason inflation is low is because manufacturers are unable to raise their prices to make supplier’s increases because the economy can’t support the increase.  With a booming economy, inflation will not only resume normal increases, they will have to make up for the artificially low prices under Obama.

The good news is that prices won’t rise until the economy actually improves and wages will rise because the number one driver of wages is employee retention.  Right now, there’s little room to move up but as the economy picks up steam and new companies are created, the possibilities rise sharply.

So, now you know to expect sharp rises in unemployment and inflation, but you also know why and know it’s a good sign for the economy.

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