You can find flaws, if you look hard enough. But the employment numbers for June are surprisingly robust and unmistakenly good for President Donald Trump.
Employers added 224,000 jobs in June, handily beating estimates and dashing concerns about a slowdown in the labor market. There was an insignificant uptick in the unemployment rate, from 3.6% to 3.7%. Manufacturers added 17,000 new jobs, swatting aside fears of a manufacturing slowdown.
Nothing bad happened this week in the Trump economy, so thanks to the strong jobs report, this week’s Trump-o-meter reads BIGLY, the second highest rating.
Here are the soft spots: Wage growth is just 3.1% and is actually down slightly. Wage growth is especially weak in manufacturing, at just 1.8%. The Trump trade war remains in effect and could still hurt the labor market. And Trump is still hectoring the Federal Reserve about cutting interest rates, which prevents the Trump-o-meter from registering the highest score, HUGE.
Still, for the time being, Trump has effective ammunition against Democratic presidential candidates claiming the economy is failing voters. The question is whether the economy will improve further by November 2020, or hit a high-water mark sometime soon and be going in reverse 16 months from now.
Trump himself can influence that. His trade dispute with China is one of the darkest clouds dogging the economy, since tariffs initiated by Trump and matched by China have raised costs for producers in both countries. The tariffs already seem to be harming consumer and business confidence. The tax cuts that went into effect in 2018 briefly boosted business investment, but that seems to be petering out, too.
It’s logical to imagine Trump has a plan for how to get a trade deal with China in time to be able to brag about it by the home stretch of the 2020 election. That’s why markets seem to be optimistic about the prospects for a deal. But China has a say, too, and if Trump’s plan counts on capitulation by China, he may be miscalculating. That could leave Trump with little option but to sign on to a cosmetic trade deal that changes little but at least gives him a nominal accomplishment to brag about while campaigning.
Meanwhile, Trump should be careful about hoping for a Fed rate cut. The last time the Fed switched from hiking to cutting rates was in September 2007, just three months before a wicked recession began. Stocks were about to hit a record high they would not regain for five and a half years. If the economy is on the verge of something like that now, Trump is in a lot more trouble than it seems.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman