Not much has remained the same since December 1969.
That month, a researcher designed the first interstate computer network, ARPANET, which has since been replaced by the internet. An actual comedian, Johnny Carson, ruled late night television back then. One-hit wonders like Steam, the group responsible for Na Na Hey Hey Kiss Him Goodbye, dominated the charts in the first week of December 1969 before the world forgot its name.
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But one thing was the same as today: the unemployment rate. It was a spectacular 3.5% back then, and it never dipped that low again until last month. In the 1990s, economists were telling us that “full employment” would include a 5% unemployment rate. Thankfully, that was wrong.
The new jobs report from the Bureau of Labor Statistics is a boon to investors weary of a scandal-ridden summer and little indication that President Trump’s trade will come to a conclusion at any point in the recent future. And Trump has boasted that the unemployment rate, which is the lowest it has been in the lives of most Americans, is evidence that his deregulatory agenda and tax cuts benefit the country as a whole.
He’s right. But there is a dark spot in the recent data that deserves the administration’s attention.
Both the jobs report and the Institute for Supply Management report that dropped earlier this week spell danger for domestic manufacturing, which is often a bellwether of the economy to come. The BLS found that manufacturing employment and workweeks stagnated. That wasn’t surprising, considering that the Institute for Supply Management’s analysis of manufacturing output and employment was very negative. Manufacturing employers and executives blame the trade war, and seeing as manufacturing data from Europe and Asia indicate a global slowdown, they’re likely correct.
Just imagine how incredible our economy could be if Trump unshackled us from this increasingly inane trade war.
Trump can afford to edge out of the trade war. After all, China’s economy has spent the past decade cooling down, with domestic signs indicating an increased risk of crisis for the world’s second-largest economy. Trump is right that China wants to deal. He ought to cut a deal aimed at multilateral disarmament, with both sides dialing back subsidies and barriers. Trump has often been pulled astray, though by a dream that “Making America Great Again” can involve returning to the days of abundant factory jobs and a world dominated by U.S. manufacturing.
Despite the similar unemployment rate, it’s not the 1960s anymore.
Though the more things change, the more they stay the same.
Back in December 1969, the Rand Corporation issued the first official warning about climate change, cautioning that humanity had “only a few decades to solve the problem,” and a man who proved his own political worst enemy was president.
What happened next?
Stagflation, multiple supply shocks, and the breakdown of our international economic alliances crashed the economy and catapulted inflation. Let history be a lesson as we embrace its virtues and learn from its mistakes.
