Set against shaky global picture, U.S. economy looks sturdy

WASHINGTON — The U.S. economy, well into its 10th year of growth, still has a spring in its step. And it’s all the more visible when set against a tiring global picture.

A robust January jobs report on Friday showed that America’s companies are, for now, brushing off an array of economic perils and still hiring at a brisk pace. The risks that for months had induced hand-wringing among economists about a possible looming recession appear to have had little effect on employers.

Overseas growth is stumbling, led by weakness in China, the world’s secondlargest economy. Europe is hamstrung by a recession in Italy and the potential for an unruly Brexit. A trade war between the U.S. and China and higher U.S. mortgage rates, partly engineered by the Federal Reserve, remain threats.

No matter. Employers added 304,000 jobs in January — the healthiest burst of hiring in nearly a year. The unemployment rate ticked up a notch to a stilllow 4 percent. But that was mostly because thousands of furloughed federal workers were considered temporarily unemployed because of the partial government shutdown. That quirk should reverse itself this month.

The solid jobs report and a separate survey that showed Friday that U.S. factory growth picked up last month “stood in stark contrast with evidence of slower economic momentum in China and Europe,” said Lydia Boussour, senior U.S. economist at Oxford Economics.

So why is the United States doing so well? And will the sluggish global economy eventually depress U.S. exports and economic growth?

Trends that had looked alarming a month or two ago now appear benign, perhaps even supportive of growth. The stock market, having plunged 16 percent late last year, rose 8 percent in January, its best monthly performance since 2015. Americans who are invested in stocks typically cut spending when market indexes fall steadily. That is now less likely to happen.

And suddenly the Fed under Chairman Jerome Powell looks like an economic ally. The central bank had raised its benchmark short-term interest rate four times last year — action that helped make mortgages and other consumer and business loans costlier. And in December, the Fed’s policymakers said they envisioned raising rates twice more this year.

But this week, the Fed held its benchmark rate steady and sent its strongest signal to date that it saw no need to raise rates in the coming months — perhaps even for the rest of the year. Its message ignited a rally on Wall Street, which cheered the prospect of continued modest borrowing rates for the near future.

Other factors have helped give the U.S. economy an edge over most of its major rivals. Ethan Harris, global economist at Bank of America Merrill Lynch, said the Trump administration’s tax cuts in late 2017 and a sharp increase in government spending last spring helped fuel growth.

“The stimulus did a very good job of covering up all the blemishes of the economy, including the risks of the trade war,” Harris said.