Back in November, the unemployment rate finally reached 5.0%, well below its post-war average and the best reading since early 2008.
Despite strong job growth and a pricey stock market, however, it was obvious then that Americans were not pleased with the U.S. economy, and I wrote this piece attempting to explain why.
Fast forward to March, and the unemployment rate has dropped to 4.9%, and the economy has added another 965,000 jobs. But the success of Donald Trump and Bernie Sanders only underscores American dissatisfaction with their economic situations, and the reasons I outlined in the fall are just as valid today.
First, the unemployment rate doesn’t tell the whole picture. As I wrote back in November:
Yes, the unemployment rate might be lower than average, but the official rate doesn’t show the full jobs story. Far more Americans are stuck in part time jobs than usual, and many Americans have given up on looking for a job altogether, even though they want one. These facts are better captured by the U-6 unemployment rate, one of several that the Bureau of Labor Statistics publishes each month.
Second, all the gains the economy is making are being captured by the already wealthy. While national income has risen steadily since the recovery, real median income has fallen:
And finally, while inflation has generally been low in recent years, the cost of goods that matter most, like education, child care, and healthcare have risen rapidly even as real incomes have fallen.
Say what you want about the economic ideas of Donald Trump and Bernie Sanders, but their proposals offer plausible solutions to these problems. Donald Trump says aggressive protectionism and a hard line on immigration will boost American jobs and wages. Bernie Sanders seeks to help the average American by taxing the wealthy to pay for college, healthcare, and paid family leave. He too wants to scrap free trade agreements, which Sanders and his supporters believe have cost Americans millions of jobs.
It shouldn’t be a surprise that these candidates are resonating with a large portion of the American public.