Trump Administration's role in strong economic numbers

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BOWLING GREEN, Ky. -- (WBKO) The Trump presidency has yielded undeniably impressive numbers when it comes to the United States economy.

With unemployment rates hitting a 16-year low, and the stock market reaching record highs, the Trump administration is cheering its successes, but how much can a change in presidency really affect these numbers?

"An overall economy in the United States is far too large to change really rapidly, unless there's something catastrophic that happens, say the financial crisis of 2008," says Dr. Dennis Wilson, a Western Kentucky University Professor of Economics.

Wilson says it's rarely as simple as a new Commander-in-chief, but it could certainly be playing a role:

"Stock Market prices, in part, are based on profitability of companies, but also based on prospects for the future," he explains. "If investors were to believe there will be less regulations or less taxes, then investors take that into consideration as a positive influence on the stock market."

The DOW reached an all-time high this month, and broke 22,000 for the first time in its history in August, growing over 4,000 points since the election.

The most recent jobs report has unemployment at 4.4%, which prior to this year, hasn't been reached since 2007.

In July, unemployment was as low as it has been in 16 years, and Dennis Wilson believes that may not be the best measurement, but still might represent more people willing to join the workforce.

Wilson says unemployment rates don't take into account, the people who have dropped from the workforce altogether. For example, if the economy tends to be in a downward state or a stagnant state, potential employees are less interested in looking for work.

"Labor force participation becomes almost a better measurement of how workers view the market than unemployment rates," he says. "A decline in unemployment rates, maybe companies are gearing up, but this may also just be a trend that had been going on from the prior two administrative changes."

Overall, it may be too soon to tell what kind of role the new administration has played.

"A simple change in presidency, as amazing as that might be in terms of a democracy," he goes on, "doesn't really change the economic direction instantaneously. It takes time."

Wilson, however, suggests that these strong numbers could still mean that the Trump presidency is having at least some effect on the economy.

"To lump it all it all onto a change in the presidency is probably overstating it, but to say that it has zero to do with it would be understating it as well."

The September jobs report has not yet been released. The Dow closed today around 22,284.



 
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