The U.S. economy had a big October with the news that 128,000 jobs were created, handily beating expectations. But then President Trump celebrated a higher number – 303,000 jobs – in a tweet that had economy-watchers momentarily confounded.
Tomas Philipson, the acting chairman of Trump’s Council of Economic Advisors, appeared on Yahoo Finance’s “YFi AM” to explain how the president got to his number.
Philipson explained that his group arrived at the 303,000 jobs number by adding 175,000 jobs to the Bureau of Labor Statistics’ October number of 128,000. Those additional jobs came from revisions from previous months (95,000 jobs) and adjustments for the GM strike (60,000 jobs) and for the recent Census (about 20,000 jobs).
When asked by anchor Dan Roberts whether - given that the underlying results were so impressive - perhaps the president didn’t need to tweet a bigger number, Philipson agreed that the underlying numbers were good.
“No, I agree. I mean we are currently in a working-class boom,” Philipson said. “The best way to help the working class is not really by government handouts but increasing demand for their labor and that's exactly what's taken place.”
The unemployment rate held near a 50-year low, and wage increases picked up slightly. Major stock market benchmarks agreed with the rosy outlook, surging at the opening bell: the S&P 500 (^GSPC) jumped to a new record, while the Dow (^DJI) and Nasdaq (^IXIC) also rose.
It was unclear exactly how the CEA arrived at an upward revision of 60,000 for GM’s work stoppage but Philipson said "that's a conservative estimate where you were basically looking at not only the GM people but also their supply chain."
Overall, Philipson was bullish on the year ahead. “We're very, very optimistic about the GDP growth going forward,” he said. GDP increased at a 1.9% annualized rate in the third quarter, which exceeded forecasts of 1.6% rate, but lower than 2.0% growth rate in the second quarter. Philipson dismissed concerns about falling business spending attributing that to the energy sector. “That's really about the slowdown in Europe and across the world,” he said.
He cited possible passage of the U.S.-Mexico-Canada Agreement (USMCA) and a potential China “phase one deal,” as reasons for optimism.
Approving the USMCA before the end of the year has been a top administration priority but Trump himself has raised concerns that Congress will pass it amid an impeachment inquiry. “I don’t know if Nancy Pelosi is going to have any time to sign [the USMCA] — that’s the only problem,” he said in September.
On China, the “phase one” deal has yet to be papered but if it does get finalized in the coming months, Philipson says the benefits “will far outweigh any sort of churning in the markets that's taken place up to now.”
Ben Werschkul is a producer for Yahoo Finance in Washington, DC.