Professor Trump delivered a lecture on the evils of international trade today. Here’s a snippet:
Massive trade deficits subtract directly from our Gross Domestic Product. From 1947 to 2001 — a span of over five decades — our inflation-adjusted gross domestic product grew at a rate of 3.5%. However, since 2002 — the year after we fully opened our markets to Chinese imports — that GDP growth rate has been cut almost in half.
What does this mean for Americans? For every one percent of GDP growth we fail to generate in any given year, we also fail to create over one million jobs. America’s “job creation deficit” due to slower growth since 2002 is well over 20 million jobs — and that’s just about the number of jobs our country needs right now to put America back to work at decent wages.
There are two interesting things about this. First, Trump was reading off a teleprompter, and you can tell. The real Donald Trump would have ranted about the real unemployment rate being 40 percent and 50 million people being out of work or something. Who knows? But the carefully handled Donald Trump produces a well-modulated stream of numbers that actually sounds plausible.
And yet—even with someone else carefully vetting the numbers, they still don’t come close to making sense. Consider: the U6 unemployment rate right now is 9.7 percent. This represents every single human being in the country who wants a job but can’t get one, or who wants a full-time job but can only get part-time work. Even if they’re discouraged and not currently looking for work, they’re counted.
The U6 series only goes back to 1994, but a good guess is that the lowest it’s been in all of postwar history is about 6.5 percent. We’d hit that mark if 5 million more people were working. If you do the calculation based on the current output gap instead of the U6 rate, you come up with roughly the same number.
In other words, 5 million is the absolute max, even in theory. If that many more people had jobs, the economy would be roaring along at a 1960s boom level. So where does 20 million come from? If it were just Trump blathering away, the question wouldn’t be worth asking. But this supposedly came from someone who actually thought about these numbers. And they’re still off by a factor of at least four. I sure hope Trump doesn’t run his business with financial estimates like this.