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Private equity investor Leo Hindery: Trump’s “economic miracle” is a mirage

If there is an “economic miracle” of the kind Donald Trump touted in his State of the Union speech last week, business leader Leo Hindery has yet to see it. Hindery’s “U.S. Real Unemployment” report paints a very different portrait than the federal government’s statistics. It’s a far more troubling picture, because it takes into account the millions of Americans who either did not look for work or cannot find full-time work.

By this measure, the Trump economy’s unemployment rate is twice as high as the official rate. At the same time, 40% of Americans cannot afford an unexpected expense of $400, according to the Federal Reserve, while roughly half of the nation’s income goes to approximately 3% of salary earners.

Hindery, managing partner of InterMedia Partners and a longtime private equity investor, spoke to Capital & Main about Trump’s economic policies, the real state of the union, and the 2020 election. The interview excerpt has been edited for concision and clarity.

Capital & Main: President Trump said Tuesday night that “an economic miracle is taking place in the United States.” Do you agree?

Leo Hindery: I think it’s one of the great obfuscations. Look at the January jobs report to contrast the difference between real unemployment and Bureau of Labor Statistics employment. The real unemployment in this country is still on the order of 8.1%, which contrasts with the much lower Bureau of Labor Statistics’ unemployment rate of 4%. There’s about 13.3 million women and men who are in every sense of the phrase real unemployed workers.

Clearly, President Trump has benefited from the foundation that President Obama laid for him. And there has been improvement in jobs. But it’s nothing as dramatic as the president suggests, and it really does hide and obfuscate the realities of the massive number of uncounted, unemployed women and men.

CM: Have Trump’s policies by and large helped or hurt the unemployed population that you’re referring to?

LH: If you look at the numbers, they’ve indisputably hurt. Corporations and wealthy individuals were the beneficiaries of the Trump tax plan. What weren’t the beneficiary were the manufacturing and job-oriented companies.

So we’ve actually seen an increase in the number of uncounted, real unemployed workers. And I just was so dismayed [Tuesday] evening when numbers that are available to refute the president’s contentions were seemingly ignored by his speechwriters, and he took credit for outcomes and activities that just aren’t real and haven’t yet materialized to the extent that he suggests.

CM: Are we the hottest economy in the world, as he claimed that night?

LH: Well, we’re certainly hotter than Europe. [But] we’re certainly not as hot as China–that’s foolishness to suggest we are. Their growth in GDP, even being less than expected, is roughly twice ours. The economy in the United States is strong, certainly stronger than anything we find in Africa, large parts of Asia–excluding China–and Latin America, and only rivaled by the Scandinavian countries. It’s good. It’s not great. But what needs to be focused on are the millions of women and men who are being uncounted and are chronically underemployed or unemployed.

CM: What do we know about the quality of the jobs that have been produced under Trump?

LH: We know that the average American worker hasn’t had a real wage increase since 1968. We had hoped that the [Republican] tax plan that was foisted upon us would have addressed that issue.

CM: The Federal Reserve found that 40% of Americans cannot afford an unexpected expense of $400. How do we reconcile that with the traditional markers that show a healthy economy and healthy job market?

LH: It’s indisputable that real wages are much lower than they should be. Women’s and men’s ability to save for the catastrophic event that might confront their families is less than marginal, it’s dangerously low. And the wrong people have been the beneficiary of the Trump tax and economic plan. What is so concerning to me is that we saw nothing [Tuesday] evening that was verifiable. It ranged from the absurd to the outright lie. And you pick up a newspaper today, and you don’t get the sense of criticism for that lying that I hoped we would see.

CM: Have America’s media been giving President Trump a pass on the economy as it relates to the basic well-being of the American middle class and working class?

LH: The president’s behavior, and that of certain of his cabinet officials and of the women and men who helped him become president, is so outrageous that the press understandably focuses on it. It’s the bright light shining in your eyes, and you can’t ignore it. In doing so, however, he has been given a relief on criticism and truth-telling around the economy. The economy discussions are complex. They’re not easy. They take study. Whereas his behavior takes no study at all.

CM: We often see in the press that if President Trump were to get out of his own way and simply talk about the economic progress that has been made during in his time in office, he would have a lot to run on for a second term. Do you agree with that?

LH: The president has been the beneficiary of the fixes that President Obama put in. And we know that, back to the Clinton era, that “it is the economy, stupid.” And these numbers can be portrayed more positively than they really are. And if the press doesn’t step up and more consistently, more outspokenly, identify the realities of the economy, then President Trump could be re-elected. He certainly could find a lot of support in the states that he was successful in against Secretary [of State Hillary] Clinton, particularly in the Midwest. So I think it’s incumbent not only on the press, but it’s incumbent on the women and men who suggested they would like to be president, or on the presidential nominee of the Democratic Party, to stay focused on the entirety of the Trump administration–its economic policies, foreign affairs, and behavior patterns that we saw again Tuesday night as he waved his arm and took credit for things for which he deserves no credit.

CM: In relation to the 2020 race, what big policy ideas would you like to see Democratic candidates embrace that would address the real unemployment rate? And more generally, the pervasive economic inequality that is still affecting very large swathes of the American population?

LH: Roughly two years ago, we saw the Trump tax plan. I hope our candidates in 2020 will throw it out the window, it should have been thrown out a long time ago. And I hope there will be another tax plan, this one that focuses on the middle class of this country rather than the wealthiest. We still have large pockets of underserved healthcare recipients [for whom], as good as the Obamacare program is, as grateful as we are that it has survived the Republican onslaught, there are still holes, and there’s still millions of women, men, and children who deserve better healthcare than they’re receiving today.

CM: Do you think the Democrats can win on a platform that calls for major increases in taxes on the wealthy, as we’re starting to see from some of the candidates?

LH: Sure they can. They should. We’ve abandoned the progressive taxation structures of this country that we built our tax code on. Too many of the wealthy of this country have a lesser tax rate than the hard-working middle-class women and men who serve this nation so ably. The sobering statistic that we have to never forget is that about half of this nation’s income is earned by about 3% of our wage earners. And the other half is earned by 97% of our wage earners. The disparity in income, the abuse of income, is indisputable and needs to be a major part of the 2020 campaign for whoever becomes our candidate.

CM: What would you like to see from business leaders in the lead-up to the 2020 election when it comes to economic fairness?

LH: All I ask is that we get back to what stood us in such good stead for fully a century, which is concurrent responsibility on the part of business–not just to shareholders, but to employees, to their communities, to our customers, and if you’re large enough, to the country itself. We have to get rational again in executive compensation, which now is measured in the hundreds of times what the average employee makes.

We have exalted CEOs. We overpay CEOs. And we do that to the detriment of our employees and the communities in which they reside, and to the country itself.

CM: Do you believe that business leaders and CEOs have a responsibility at this moment to be more outspoken about the political, constitutional, and economic challenges that we face under President Trump?

LH: One of the great disgraces are the CEOs who don’t feel that it’s their responsibility to speak out. I’m so proud of some of the CEOs that have stood up in this era. But they’re few and far between. And the responsibility is acute. The performance is a little bit lacking right now.


Capital & Main is an award-winning publication that reports from California on economic, political, and social issues.

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