Steven Rattner’s Charts in the NYT Don’t Show What He Says They Show1st January 2019
Steven Rattner used his NYT column to present a number of charts to show Donald Trump’s failures as president. While some, like the drop in enrollments in the health care exchanges, do in fact show failure, others do not really make his case.
For example, he has a chart with a headline “paltry raise for the middle class.” What his chart actually shows is that middle class wages, adjusted for inflation, fell sharply in the recession, but have been rising roughly 1.0 percent a year since 2014. They recovered their pre-recession levels in 2017 and now are almost a percentage point above the 2008 level. This is not a great story, but the picture under Trump is certainly better than under Obama. (This wasn’t entirely Obama’s fault, since he inherited an economy in the toilet.)
The chart shows more rapid growth at the bottom of the pay latter and a modest downturn under Trump for those at the top. By recent standards, this is not a bad picture, even if Trump does not especially deserve credit for it. (He came in with an unemployment rate that was low and falling.)
Rattner also presents as a bad sign projections for fewer Fed rate hikes. While one basis for projecting fewer rate hikes is that the economy now looks weaker for 2019 than had been thought earlier in the year (but still stronger than had been projected in 2016), another reason is that inflation is lower than expected. Economists have consistently over-estimated the impact that low unemployment would have on the inflation rate. With inflation coming in lower than projected, there is less reason for the Fed to raise rates.
Contrary to what Rattner is implying, this is a good development. It means that the unemployment rate can continue to fall and workers at the middle and the bottom of the pay ladder can continue to see real wage gains.
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