Donald Trump has spent the last six months anxiously looking for a way out of his ruinous trade war with China. Now a new set of troubling economic indicators signal the US economy may be even weaker than expected under him. And that’s bad news for his shaky re-election prospects.
The new wave of economic anxiety comes after the ISM Manufacturing Index, the nation’s report card for factories and industrial production, fell even further into recession territory in November. The Manufacturing Index tracks how many manufacturers plan to expand operations in the coming months: any number below 50 means America’s biggest makers predict a contraction.
The Manufacturing Index is known to fluctuate, but recent trends should worry Rust Belt workers dependent on humming factories for their livelihoods. November marks the fourth month of consecutive contraction in the index, roughly tracking a steep decline in new manufacturing orders. Fewer orders means less work and a shrinking economy for those in the middle class.
That kind of middle-class-targeted recession is a nightmare scenario Trump has tried, unsuccessfully, to delay until after the November 2020 elections. The president attempted to stave off a similar rural recession by dumping $28 billion in cash on struggling Red State farmers earlier in the year. Now the Agriculture Department says up to $15 billion more in emergency spending may be necessary. Even then, direct payments to hurt farmers won’t cover the full scope of their trade war losses. Tariffs against Brazil and Argentina, announced this week to try and undo some of the damage done to US farmers by Trump's trade war on China, will most likely only make things worse — not to mention his on-again/off-again threats against France and his apparent refusal to even attempt to solve things with China until after the 2020 election.
Additionally, an increasing number of Republican legislators are bristling at the size of Trump’s government spending bill. It’s unclear if he has the political support to launch a second, massive bailout of industrial workers in must-win states like Pennsylvania, Ohio and Michigan.
Trump has used cash payments as a cure-all to every political ailment so far — and the brewing Republican revolt on spending will complicate his election-obsessed policy choices.
The president likes to argue that the economy is still growing and creating jobs — and he’s right. The Trump administration now presides over the longest economic expansion in American history, which began under Barack Obama in the months following the global recession. But new research from a team of academics and Wall Street veterans shows the quality of new jobs under Trump doesn’t compare to those created under Obama.
Those researchers use what is called the Job Quality Index, a comprehensive survey tool that digs deeper into job creation numbers than their counterparts in the federal government. For the feds, employment is a numbers game where bigger is always better. The Job Quality Index, by comparison, looks at the overall value of the jobs created: do they offer health insurance? Do they pay a living wage?
It makes sense that an economy is stronger when it produces high-value, career-track jobs instead of spitting out an endless supply of low-paid Uber drivers and fast food gigs. But the Job Quality Index finds those low-value jobs are predominating under Trump. The JQI indicates over 63 per cent of all recently created jobs are low-wage, low-hour roles that don’t offer the benefits commonly associated with high quality employment.
The Job Quality index provides new depth to a phenomenon Trump has tried his best to ignore: while the American economy may be doing well for the ultra-wealthy, working class and middle class Americans are living in near-permanent recession. The economy is splitting into a house divided. On one side, billionaires are enjoying lower taxes and faster income growth than at any point in modern history. On the other, middle class workers are increasingly taking out high-interest installment loans to keep their lives afloat.
If you work for a paycheck, you likely haven’t seen meaningful wage growth in nearly a dozen years. If your income comes from sheltered investments, life has never been better.
President Trump now asks average Americans to cheer on the obscene financial gains of their ultra-wealthy countrymen while accepting a declining economic landscape for themselves. As he and his complicit Republican Senate push for ever lower taxes for their billionaire base, the middle class will be left to pick up the scraps of an unprecedented economic boom.
Too many Americans have spent the past three years struggling to find and keep work in an economy where manufacturing is in steady decline and wages show no sign of growth. As the disparity between haves and have-nots becomes clearer, pollsters on the Trump campaign are beginning to panic. Voters were willing to give Trump a chance in 2016. It looks like their patience has finally run out.