Trump to in­herit solid but un­even econ­omy

Hir­ing solid, job­less rate low, but long-term woes per­sist

Kuwait Times - - BUSINESS -

WASH­ING­TON:

The US jobs re­port on Fri­day made one thing clear: Pres­i­den­t­elect Don­ald Trump will in­herit the same two-track US econ­omy that be­dev­iled his pre­de­ces­sor.

Hir­ing is solid and the un­em­ploy­ment rate low. But longer-term prob­lems per­sist - es­pe­cially a stub­bornly high num­ber of men who are out of work and have given up look­ing. Many are likely frus­trated for­mer man­u­fac­tur­ing work­ers who voted for Trump over Hil­lary Clin­ton.

Em­ploy­ers added 178,000 jobs in Novem­ber, the gov­ern­ment said, ex­tend­ing the long­est streak of hir­ing since World War II. And the un­em­ploy­ment rate sank from 4.9 per­cent to a nine-year low of 4.6 per­cent. Yet the job­less rate dropped mainly be­cause many of those out of work gave up on their job hunts and were no longer counted as un­em­ployed. A key chal­lenge for the Trump ad­min­is­tra­tion is to ex­tend the ben­e­fits of job growth to in­clude many of those who feel left out. The job mar­ket’s dura­bil­ity will help to some ex­tent. Even­tu­ally, low un­em­ploy­ment should com­pel em­ploy­ers to of­fer higher pay to at­tract more work­ers. That, in turn, could per­suade more Amer­i­cans to re­sume their job hunts and find work.

“With the un­em­ploy­ment rate this low and wages ris­ing, now is the real test of whether a stronger econ­omy can bring peo­ple back into job mar­ket,” said Jed Kolko, chief econ­o­mist at job hunt­ing web­site In­deed. Aside from the longert­erm chal­lenges, re­cent data sug­gest that the econ­omy is in de­cent shape. Amer­i­cans bought homes in Oc­to­ber at the fastest pace in nearly a decade. They’re also more con­fi­dent in the econ­omy than at any other point in the past nine years and are spend­ing more.

Those trends are keep­ing the Fed­eral Re­serve on track to raise short-term in­ter­est rates at its next meet­ing in less than two weeks. “For the Fed, bar­ring a very ad­verse ... devel­op­ment, a hike at the Dec. 14 meet­ing ap­pears to be a done deal,” said Michael Feroli, an econ­o­mist at JPMor­gan Chase.

Two mea­sures il­lus­trate the mixed na­ture of the eco­nomic re­cov­ery: The un­em­ploy­ment rate is now back to where it was in Au­gust 2007 - four months be­fore the Great Re­ces­sion be­gan. That sug­gests that the econ­omy has fully re­cov­ered.

Yet the per­cent­age of all adults with jobs is still 3 per­cent­age points be­low where it was in Au­gust 2007. Some of that decline has been driven by re­tire­ments among the ag­ing baby boom gen­er­a­tion. But for men age 25 through 54 years old - prime work­ing years - the pro­por­tion who have jobs re­mains sub­stan­tially be­low its pre-re­ces­sion level. That trans­lates into mil­lions of men who are nei­ther work­ing nor look­ing for work.

Why have so many men dropped out?

Kolko says that is “prob­a­bly the big­gest ques­tion fac­ing the la­bor mar­ket to­day.” Many men who aren’t work­ing blame men­tal or phys­i­cal health prob­lems. Alan Krueger, an econ­o­mist at Prince­ton and a for­mer top ad­viser to Pres­i­dent Barack Obama, has found that nearly half of men ages 25 through 54 who are out­side the work­force take pain med­i­ca­tion.

The na­tion has lost nearly a third of its man­u­fac­tur­ing jobs since 2000, and many who once held those po­si­tions have strug­gled to find work that pays as well. But Ni­cholas Eber­stadt, an econ­o­mist at the right-lean­ing Amer­i­can En­ter­prise In­sti­tute, notes that most Euro­pean coun­tries also lost man­u­fac­tur­ing jobs, yet haven’t seen a sim­i­lar decline in male em­ploy­ment.

In­stead, Eber­stadt points to high lev­els of in­car­cer­a­tion over the past three decades. That’s left mil­lions of men with crim­i­nal records that can make it hard for them to find work even years af­ter they’ve com­pleted their sen­tences. Randy Shacka, pres­i­dent of Lans­ing, Michi­gan-based mov­ing firm Two Men and a Truck, says jobap­pli­cants have had a harder time pass­ing drug tests in re­cent years, par­tic­u­larly in states that have eased mar­i­juana laws.

The com­pany hopes to add 3,000 to its 8,000-per­son staff by June, when mov­ing sea­son heats up. But with un­em­ploy­ment down and the econ­omy grow­ing con­sis­tently, the com­pany has had to try harder to find qual­i­fied ap­pli­cants. It re­cently in­tro­duced a 401(k) plan and has ramped up train­ing, Shacka said. Slug­gish pay gains have been a chronic prob­lem for the econ­omy and have pro­vided less in­cen­tive for those who have dropped out to re­sume job hunts. Av­er­age hourly pay slipped in Novem­ber and has risen just 2.5 per­cent in the past year. Wage in­creases re­main be­low the level con­sis­tent with healthy growth.

The econ­omy “is fun­da­men­tally un­der­per­form­ing, and needs struc­tural fixes to im­prove its long-term growth rate,” said Dou­glas Holtz-Eakin of the con­ser­va­tive Amer­i­can Ac­tion Fo­rum and for­mer di­rec­tor of the Con­gres­sional Bud­get Of­fice. Holtz-Eakin said the Trump ad­min­is­tra­tion’s plans to cut cor­po­rate and in­di­vid­ual taxes and lift many reg­u­la­tions should en­able com­pa­nies to in­vest in machin­ery and other equip­ment. That, in turn, could make work­ers more pro­duc­tive and boost pay.

Dave Arndt, chief ex­ec­u­tive of Pentaflex, a man­u­fac­turer in Spring­field, Ohio, hopes Trump will also fol­low through on his prom­ise to boost spend­ing on roads, bridges and other in­fra­struc­ture.

Pentaflex makes axles, ex­haust sys­tems and other parts for long-haul trucks. It’s had to cut jobs in the past year as truck­ers have shipped less freight. More build­ing would mean more ship­ping of con­struc­tion ma­te­ri­als. “Any­thing that puts more trucks on the road is good for busi­ness,” Arndt said.

COSTA MESA: Eric Denker and his wife Jalen Denker of Irvine take ad­van­tage of sales to buy suits for busi­ness school in­ter­views at South Coast Plaza in Costa Mesa, Cal­i­for­nia. The US gov­ern­ment is­sued the Novem­ber jobs re­port on Fri­day.—AP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.