Originally published on Colorado Politics (June 13, 2019)
By Kelly Sloan
Larry Liston, the bright and affable representative from Colorado Springs, made a habit this past legislative session of taking a few moments at the well every few days or so to report on the happy state of the nation’s economy. This could be a little vexing for some of the Democratic majority (which of course was a good part of the reason he did it), but the numbers are the numbers, and besides, no one can stay mad at Larry Liston for very long.
Now, I know Larry Liston, and I’m no Larry Liston, but with the annual expiration of his regular pulpit having passed, I hope he won’t mind if I ever so briefly take up where he left off. I think it is fair to assume that the May jobs report released last week would have provided Rep. Liston a fresh field from which to harvest nuggets for his regular updates.
The figures have depreciated somewhat, but remain impressive. The May unemployment rate stayed at 3.6 percent, the lowest it has been since December of 1969. May also marked the 15th straight month of unemployment being at or below 4 percent.
Wage growth is still strong as well, increasing 3.1 percent since the same time last year – the 10th straight month of year-over-year wage growth of 3 percent or greater. This means that wages are increasing faster than inflation, translating to an average annual pay increase of around $900 per worker.
The report did include a cautionary wrinkle; the figures disclose that 75,000 jobs were added to the economy in May, and as positive as that number is it does indicate a cooling of the labour market, coming in rather significantly below most analyst’s predictions of 175,000. That draws the year-to-date average monthly job growth down to around 164,000 – not exactly anemic by any means, but still lower than last year’s gangbuster average monthly job growth of 223,000.
Now one month does not constitute a trend, and in aggregate the economic figures are remarkable. Even looking at the May numbers on a stand-alone basis, about the worst that can be concretely said is that the suggestion of a slowdown could entice the Fed to reduce interest rates later this year, a wager which the stock market reacted quite favorably to last Friday. The numbers ought to still be considered admonitory, however.
To be sure, the economy is a complicated creature (the main argument, by the way, against obnoxious attempts to control it through central planning), and there are a myriad of factors that contribute to its health and maintenance that have nothing to do with who occupies the White House or who controls Congress; and unless a majority of the economic ideas being spouted by the 2020 Democratic presidential candidates are actually ever tragically implemented, it will likely stay that way. But it would take the most naively disengaged, or the most cultish Rational Expectations theorist, to suggest that the public policies enacted within the past two years by the Trump administration have had no impact.
There is little quarrel among informed minds that the implementation of rational tax policies and the loosening of the governmental thumbscrews on industry and entrepreneurship have gotten us to the merry place we are economically; but just as good policy got us here, bad policy can still mess it up.
The one ink stain on the national economic canvas is that of lingering trade issues. The same informed thought which praises the tax and regulatory reforms also recognizes the harm that an escalating tariff battle will cause, particularly to the agricultural sector, which remains a large and significant part of Colorado’s economy. So far, Trump’s strategy of using the threat of trade sanctions to coax cooperation from other countries on crucial issues seems to be working, but for how long? And how much of the weaker hiring in May is an adumbration of market fears of a trade war?
In Colorado we are being given the opportunity to mess up our own good fortune by emasculating the Taxpayer’s Bill of Rights through elimination of its disciplinary function. The principal fiscal question in the state over the next year will likely be the pending ballot measure that does away with the constitutional cap on government growth, which, along with the flat tax and the balanced budget, has done more than anything to keep Colorado financially solid. Opposition to this element of TABOR, like the opposition to the Trump tax cuts – or indeed an embrace of tariffs – will yield some limited rhetorical satisfaction to those predisposed to such illusions, but will not stand up to empirical analysis and rational scrutiny.
Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver.