Amer­i­cans go to the polls against back­drop of an un­even econ­omy

Kuwait Times - - BUSINESS -

The US econ­omy is lift­ing job growth and wages but not vot­ers’ spir­its. Amer­i­cans are choos­ing a pres­i­dent against a back­drop of slow but steady growth that has man­aged to re­store the econ­omy from the crush­ing set­back of the Great Re­ces­sion. The gov­ern­ment’s Oc­to­ber jobs re­port , re­leased Fri­day, showed that hir­ing re­mains solid, with 161,000 jobs added. The un­em­ploy­ment rate is a low 4.9 per­cent.

Yet the re­cov­ery, the slow­est since World War II, has left many Amer­i­cans feel­ing left be­hind, es­pe­cially those who lack high skills or ed­u­ca­tion or who live out­side ma­jor pop­u­la­tion cen­ters.

“The (typ­i­cal) US house­hold is in a much bet­ter spot than they were eight years ago,” said Mark Zandi, chief econ­o­mist at Moody’s An­a­lyt­ics. “But it hasn’t been a great decade for any­one ei­ther. You’ve still got a big chunk of the pop­u­la­tion who feels this hasn’t worked for them.”

The econ­omy’s weak spots are a top con­cern for a ma­jor­ity of vot­ers, who say the U.S. econ­omy is in poor shape, ac­cord­ing to an As­so­ci­ated Press-GfK poll. At the same time, they say their own per­sonal fi­nances are good. Fifty-three per­cent of vot­ers say the econ­omy is “poor,” while 46 per­cent say “good,” ac­cord­ing to the poll, con­ducted Oct. 20-24. Yet 65 per­cent say their own fi­nances are good, ver­sus 34 per­cent who rate them poor.

Seventy-three per­cent of Hil­lary Clin­ton sup­port­ers say that the econ­omy is good; just 16 per­cent of Don­ald Trump sup­port­ers say so.

And while 60 per­cent of whites say the econ­omy is poor, 60 per­cent of non­whites call it good. Yet whites and non­whites are about equally likely to say their own per­sonal fi­nances are good.

Con­sider 73-year-old Charles Muller, who lives out­side Tren­ton, New Jersey, and de­scribes his per­sonal fi­nances as fine. He has a pen­sion from 26 years as a state em­ployee and re­ceives So­cial Se­cu­rity.

But the broader econ­omy seems fairly weak to Muller. A friend was laid off dur­ing the re­ces­sion, then earned a teach­ing cer­tifi­cate, and yet still can’t find a full-time teach­ing job. And a friend’s daugh­ter who re­cently grad­u­ated from col­lege is stuck as an as­sis­tant man­ager of a dol­lar store.

“I know a lot of peo­ple who are strug­gling and have been un­able to find jobs com­men­su­rate with their ed­u­ca­tion lev­els,” Muller said. He is sup­port­ing Trump, though he sees the ma­jor pres­i­den­tial nom­i­nees as “the two worst can­di­dates I’ve ever been given a choice of.” Here’s a snap­shot of the US econ­omy of the eve of the elec­tions:

The job mar­ket has proved it­self re­silient. Em­ploy­ers have added an aver­age of 181,000 jobs a month this year. That’s down from last year’s ro­bust 229,000 aver­age. But it’s nearly dou­ble the monthly pace needed to lower the un­em­ploy­ment rate over time. The num­ber of peo­ple seek­ing un­em­ploy­ment ben­e­fits is near a 40-year low - ev­i­dence that lay­offs are scarce and most Amer­i­cans are en­joy­ing strong job se­cu­rity. Blake Zal­cberg, pres­i­dent of OFM, a fur­ni­ture man­u­fac­turer in Raleigh, North Carolina, hopes to add nine em­ploy­ees to his 58-per­son com­pany, in­clud­ing graphic artists, pho­tog­ra­phers and sales staff. He ex­pects sales to grow by a third next year.

“It’s a fairly ro­bust fur­ni­ture mar­ket,” he said.

With the un­em­ploy­ment rate down to 4.9 per­cent from a peak of 10 per­cent in 2009, busi­nesses have been forced to com­pete harder for new em­ploy­ees. That’s giv­ing work­ers more bar­gain­ing power when they seek new jobs and fi­nally boost­ing pay. Aver­age hourly wages grew 2.8 per­cent in Oc­to­ber from a year ear­lier - the fastest 12-month pace in seven years. Still, his­tor­i­cally speak­ing, that’s not great. Wages typ­i­cally rise at about 3.5 per­cent each year in a healthy econ­omy.

Steady hir­ing and mod­est pay in­creases have em­bold­ened more Amer­i­cans to buy high-cost items like new cars. Auto sales are run­ning near last year’s record pace of more than 17 mil­lion ve­hi­cles. Yet cau­tion still reigns: Amer­i­cans’ spend­ing grew just 2.1 per­cent in the July-Au­gust quar­ter, down from a much health­ier 4.3 per­cent in the pre­vi­ous three months.

The burst­ing of the last decade’s hous­ing bub­ble wiped out tril­lions in house­hold wealth, cost more than 5 mil­lion Amer­i­cans their homes and trig­gered the Great Re­ces­sion. Yet the home mar­ket has mostly re­cov­ered, with na­tion­wide aver­age pur­chase prices just 7 per­cent below their 2006 peaks. Greater home val­ues have helped many fam­i­lies re­coup some of their lost wealth. Sales of ex­ist­ing homes have plateaued this year at a nearly healthy level of about 5.4 mil­lion.

Doug Dun­can, chief econ­o­mist at Fan­nie Mae, fore­sees sales growth slow­ing next year. But younger Amer­i­cans are in­creas­ingly likely to buy homes, sug­gest­ing that mil­len­ni­als are tir­ing of liv­ing in apart­ments - or in their par­ents’ base­mentsand are start­ing to move out.

Com­pa­nies with op­ti­mistic out­looks typ­i­cally spend more on com­put­ers, ma­chin­ery and other equip­ment to keep up with de­mand. In­stead, in re­cent months the op­po­site has hap­pened: Busi­ness in­vest­ment in new equip­ment has fallen for four straight quar­ters. Some of that pull­back oc­curred be­cause oil drillers slashed spend­ing on steel pipe and other gear in re­sponse to sharply lower oil prices. But many com­pa­nies are also likely hold­ing off on new spend­ing un­til af­ter the elec­tion, when po­ten­tial eco­nomic pol­icy changes will be clearer.

The US econ­omy has failed to grow much more ef­fi­cient. Since the re­ces­sion be­gan in 2007, pro­duc­tiv­ity - or out­put per hour of work - has grown at less than one-third the an­nual pace it did from 2000 through 2007. Ris­ing pro­duc­tiv­ity is vi­tal to rais­ing liv­ing stan­dards, be­cause it en­ables com­pa­nies to raise pay with­out rais­ing prices.

Econ­o­mists blame a range of fac­tors for the slow­down: Amer­i­cans are start­ing fewer new com­pa­nies, which tend to be quicker to adopt new tech­nolo­gies. And weaker in­vest­ment in roads, ports and other in­fra­struc­ture has slowed ship­ping and com­mut­ing times.

Mil­lions of Amer­i­cans haven’t ben­e­fited from the con­sis­tent hir­ing of the past sev­eral years. Mid­dle-in­come jobs in man­u­fac­tur­ing and of­fice work were per­ma­nently lost in the re­ces­sion and have been re­placed by lower-pay­ing work in re­tail and fast food. Many of the un­em­ployed have given up look­ing for work and are no longer counted as un­em­ployed.

Ni­cholas Eber­stadt, author of a new book, “Men With­out Work,” notes that this has been a long-term phe­nom­e­non. For ev­ery un­em­ployed man ages 25 through 54, three oth­ers are nei­ther work­ing nor look­ing for work. That ra­tio has dou­bled since 1990. — AP

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