Rocking the U.S. economy Positive indicators should calm the emotional seesaw
Love makes the world go ’round, it is said, but it’s money that greases its spin. When news arrives of a weakening economy, some looking out through the wrong end of binoculars can mistake a fly in the ointment for a wallet-ravaging behemoth. With proper perspective, there can be little doubt the U.S. economy under President Trump is on full throttle, and the roar means rising prosperity for American families.
Faces turned crestfallen last Thursday when the Institute for Supply Management (ISM) announced that its nonmanufacturing index dropped 3.8 points in September to 52.6, the lowest reading in three years. With the service industry being the nation’s largest business sector, a slowing trend renewed money media murmurs of a coming recession, particularly with a similar slowdown currently underway in Germany, Europe’s largest economy.
Just as fingers drummed nervously around the New York Stock Market, CNBC added to the gloom, reporting, “Americans’ attitudes toward the economy took a sharp turn downward in the third quarter, according to the CNBC All-America Economic Survey, with just 23 percent believing the economy will improve in the next year, the lowest level of optimism in three years.” On the heels of the dismal ISM index, CNBC further noted, “Stocks declined for a third day on Thursday after a reading of the services economy came in much worse than expected.”
Trend lines can prove faulty when extended from the present into the future, which is why virtually every mutual fund prospectus advises, “Past performance is no guarantee of future results.” The market sell-off that analysts reported in the morning evaporated during an afternoon turnaround that left the Dow Jones Industrial Average up 122 points by the closing bell. That’s the sort of “decline” that the 54 percent of American families who own stocks would welcome enthusiastically.
Like kids on a seesaw, good news and bad news rock public sentiment up and down on the economic playground day in and day out. Forty-eight percent of respondents in the CNBC survey believe the economy to be excellent or good, down a smidgeon from 51 percent in May. At the same time, 50 percent turn thumbs down on Mr. Trump’s handling of the economy, the worst rating of his presidency. It just goes to show that for some, every silver cloud has a dark lining.
Those who can’t seem to find something to like in the current state of economic affairs may have missed the nation’s monthly employment numbers. The U.S. Bureau of Labor Statistics reported Friday that payroll employment increased by 136,000 in September, driving down the unemployment rate to 3.5 percent, the lowest since 1969. The number of Americans gainfully employed reached a record 158.3 million.
Participation in the prosperity extends through all population demographics. The unemployment rate for white Americans registered at 3.2 percent and 3.9 percent for Hispanics. For blacks, the rate remained at its record low of 5.5 percent. Asian unemployment beat all categories at 2.5 percent. Men logged a 3.2 percent unemployment rate, jobless women measured 3.1 percent and teenagers looking for work were pegged at 12.5 percent.
Unsurprisingly, the president couldn’t help but point out the blunt contradiction between the stellar success of his economic policies and the dogged efforts of Democrats to remove him from office: “Breaking News,” Mr. Trump tweeted. “Unemployment Rate, at 3.5%, drops to a 50 YEAR LOW. Wow America, lets impeach your President (even though he did nothing wrong!).”
The president has a habit of stomping where others fear to tread. His hardnosed trade negotiations with China have periodically roiled stock markets and contributed to alarm that a failure of the two largest economies to reach a deal could bring on a global recession. China’s trade team is slated for a fresh round of talks in Washington this week.
White House chief economic adviser Lawrence Kudlow told Fox News Friday that recent signs of good will on both sides are reason for measured optimism: “President Trump has said he’d like to have a deal, but it has to be a good deal covering all the issues, the [intellectual property] theft and the forced technology transfer and, of course, the tariffs.”
Since Mr. Trump took office, U.S. household annual income has risen by $5,000, adjusted for inflation, according to economic consultant Stephen Moore. The bottom line is American families now have more money to live the lives they love.