The econ­omy’s con­tin­u­ing lethargy

And work on the pro-growth tax cut bill may not even be­gin any­time soon

The Washington Times Daily - - OPINION - By Don­ald Lam­bro Don­ald Lam­bro is a syn­di­cated colum­nist and con­trib­u­tor to The Wash­ing­ton Times.

Pres­i­dent Trump touts the econ­omy ev­ery now and then, tak­ing credit for the stock mar­ket’s record rise, and the few job deals he’s ne­go­ti­ated. But a closer look at re­al­ity re­veals a much gloomier pic­ture. If you hap­pen to own stocks, no doubt you have richly ben­e­fited from the mar­ket’s record rise in the past six months. If you’re among the mil­lions of lower to mid­dle class Amer­i­cans strug­gling pay­check to pay­check, or still with­out a job, it’s a very dif­fer­ent story.

Let’s look at the facts.

Too many peo­ple are still hurt­ing and tight­en­ing their belts and nowhere is that more ev­i­dent that in the U.S. Com­merce De­part­ments’s in­come growth re­port in June. It showed that con­sumer spend­ing is turn­ing in its weak­est per­for­mance in seven months.

In­comes were flat in June and barely reg­is­tered 0.3 per­cent growth the month be­fore. Spend­ing slowed to a crawl, inch­ing up 0.1 per­cent in May.

Un­der Pres­i­dent Obama, eco­nomic growth seemed locked into the 2 per­cent range year af­ter year, and this year looks no dif­fer­ent.

The Gross Do­mes­tic Prod­uct (GDP), the broad­est mea­sure of how our econ­omy is do­ing, rose an ane­mic 2.6 per­cent rate in the sec­ond quar­ter from April through May, up from 1.2 per­cent in the first quar­ter.

An­other in­di­ca­tion of the econ­omy’s weak­ness can be seen in the auto in­dus­try. U.S. car­mak­ers re­ported bleak num­bers Tues­day that showed car and light truck sales de­clined for the fifth month in a row, ac­cord­ing to Au­to­data which tracks the au­to­mo­tive in­dus­try.

Ford said its sales fell 7.5 per­cent in July, while Fiat Chrysler’s sales plunged 10 per­cent. Durable goods or­ders are an im­por­tant gauge of the econ­omy’s health, but June’s huge 6.5 per­cent spike was dis­missed as “a mi­rage” by Mar­ket Watch.

Set aside the air­craft and auto in­dustries, and or­ders crept up by a mi­nus­cule 0.2 per­cent, “and a key mea­sure of busi­ness in­vest­ment fell for the first time in 2017,” the eco­nomic watch dog re­ported.

Over­all, “Fac­tory or­ders, pro­duc­tion and hir­ing all grew more slowly in July,” the As­so­ci­ated Press re­ported on Tues­day.

An­other sign of the econ­omy’s weak­ness can be seen in ris­ing in­ven­to­ries in re­tail and whole­sale prod­ucts. The Com­merce Depart­ment re­ported that both were up by 0.6 per­cent in June among durable and non­durable goods.

But ris­ing “in­ven­to­ries can send mixed mes­sages — one of con­fi­dence, in that com­pa­nies are get­ting prod­ucts to even­tu­ally sell, but also one of tepid de­mand,” says Mar­ket Watch.

And “de­mand ap­pears to have ta­pered off a bit… as the White House’s agenda gets bogged down in Wash­ing­ton,” the eco­nomic website re­ports.

“Bogged down” is putting it mildly. The key to get­ting Amer­ica’s econ­omy mov­ing again is pass­ing the GOP’s tax cut pack­age as fast as pos­si­ble. But it faces a num­ber of leg­isla­tive road blocks, es­pe­cially the Au­gust re­cess when Congress takes the en­tire month off.

More­over, be­fore the Repub­li­cans can turn to tax cuts, they must pass a new bud­get by the end of Septem­ber to avoid a gov­ern­ment shut­down. At the same time there will be a bit­ter fight over a debt limit bill on just how much the U.S. Trea­sury can bor­row to keep the gov­ern­ment funded over the next year or two.

Ear­lier this year, Repub­li­can lead­ers had ex­pected that they would be able to be­gin work on a progrowth tax cut bill in Septem­ber, but no one be­lieves that now.

In­stead, re­ports from Capi­tol Hill in­sid­ers say Congress may not be able to com­plete its work on the bill un­til next year, at the ear­li­est.

As of now, Repub­li­can lead­ers still haven’t agreed on the ba­sic shape and size of the tax cuts or even whether they will be per­ma­nent or tem­po­rary.

Mean­time, the U.S. econ­omy con­tin­ues to bum­ble along at a sub­par pace. And there is “lit­tle ev­i­dence that Trump’s poli­cies have had much ef­fect on the econ­omy,” writes eco­nomic an­a­lyst Ben White in Politico, the widely read Wash­ing­ton website. “Busi­ness and in­vestor con­fi­dence soared af­ter the elec­tion on hopes of dereg­u­la­tion and sweep­ing tax re­form. The stock mar­ket also raced ahead. Shares on Wall Street have re­tained those gains, but other mea­sures of con­fi­dence have be­gun to drop fol­low­ing the long fight over health care,” he wrote this week.

“And Trump’s promise of the big­gest tax cut in his­tory re­mains far from fruition.”

Ac­cord­ing to na­tion­wide sur­veys, most Amer­i­cans are un­happy with the econ­omy’s lethargy and that is es­pe­cially re­flected in Trump’s dis­mal job approval polls.

Just 39 per­cent of Amer­i­cans in the Gallup Poll’s daily, na­tion­wide sur­veys last month ap­proved of the job he is do­ing thus far, sub­stan­tially below approval polls for the pre­vi­ous nine pres­i­dents in their first six months in of­fice.

An­other in­di­ca­tion of the econ­omy’s weak­ness can be seen in the auto in­dus­try. U.S. car­mak­ers re­ported bleak num­bers Tues­day that showed car and light truck sales de­clined for the fifth month in a row, ac­cord­ing to Au­to­data which tracks the au­to­mo­tive in­dus­try.

IL­LUS­TRA­TION BY MARK WEBER

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