By Adam Ozimek
President Trump brings a lot of risks and uncertainty to the economy. But Trump is, if anything, unpredictable - and one possibility is that he does very little and lets the economy continue to heal on its own. It's worth asking, then: What's the best performance that the economy could churn out over the next four years? This is a tough question to answer rigorously, but let me at least take a lazy and vague crack at it.
Here's a very, very simple benchmark to look at: the prime-aged employment-to-population ratio. This is the percent of people ages 25-54 who have jobs. Right now the non-institutional population ages 25-54 is about 125 million people. If you look over the long term, the employment-to-population rate falls during recessions, then slowly recover. So if we can avoid a recession, it's not crazy to think we could get back to the 2000 levels. That means going from 78.2% today to 81.9%, an increase of 3.7 percentage points.
If you apply this to the 125 million population, that's about 4.6 million jobs. If these jobs take the whole four years of the Trump administration to recover, that's 95,000 jobs a month above and beyond the natural growth in the labor force. When you add in that natural labor force growth, that should be enough to keep job growth in the range from the last three months, which has averaged 165,000.
So, if everything goes smoothly and Trump doesn't do anything crazy, or anything really, he could potentially keep the current pace of job growth running for a few more years and maybe even for the whole term. That's not to say this level of growth is necessarily going to happen even if Trump does a "good job". It could be that some of the declining participation is of a stubborn structural nature, but I do think it's somewhere between possible and plausible.
If I were Trump, I'd do the absolute minimum policy-wise and make job #1 avoiding a recession... I'd also probably change the hairdo. I would not bet on this outcome - the "doing nothing" outcome, not the haircut - but we can't rule it out.