Why Donald Trump Is Wrong About a Massive Recession

Economy

Published: April 4, 2016 12:20 pm

Last Updated: January 13, 2020 11:10 am

If there has ever been an incredible election cycle, this has been it. For the first time in years, we may very well have a contested convention for the Republicans, and the Democrats could easily get into a big squabble over the so-called super delegates. One thing is for sure, we have seen the rhetoric escalating, and escalating in a big way, and the general election is still seven long months away.

While we generally steer clear of politics at 24/7 Wall St. and leave that for the experienced pundits in that arena, we did find the recent comments by current Republican front-runner, businessman Donald Trump, as reasonably inflammatory when it comes to the economy and the stock market.

In an interview that was published this past weekend in the Washington Post, Trump was quoted as saying that the U.S. economy was poised for a “very massive recession,” and he questioned current statistics that put the nation’s unemployment numbers in the 5% range, saying they were closer to 20%.

Now he is hardly the first to make that claim, but the reality is the nation’s current labor force participation rate from the Bureau of Labor Statistics for March stands at about 63%. That is the lowest rate since the Jimmy Carter era, back in 1978. The low point, according to historical data going back to 1948, came in December 1954, when the rate was 58.1%. With those numbers in mind, the current unemployment numbers, while arguably hit or miss, are probably close to accurate. We rarely have a huge recession at 5% unemployment, and the participation rate was actually higher in March.