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This week in Trumponomics: Jobs to the rescue

·Senior Columnist
WASHINGTON, DC - MARCH 15: U.S. President Donald Trump speaks during an event on border security in the Oval Office of the White House March 15, 2019 in Washington, DC. President Trump has vetoed the congressional resolution that blocks his national emergency declaration on the southern border.  (Photo by Alex Wong/Getty Images)
WASHINGTON, DC - MARCH 15: U.S. President Donald Trump speaks during an event on border security in the Oval Office. (Photo by Alex Wong/Getty Images)

As President Trump likes to say: JOBS! JOBS! JOBS!

Trump has reason to celebrate, since employers created 196,000 jobs in March, slightly above economic forecasts. The economy has now added jobs for 102 months in a row, and wage growth has picked up too. Job growth during the Trump presidency now tops 5 million.

The welcome news on jobs distracted from more troublesome developments. In frustration over a surge of migrants seeking asylum in the United States, Trump threatened to shut the U.S. border with Mexico, which would cause economic turmoil. He relented, substituting another threat: slapping 25% tariffs on automotive imports from Mexico, if Mexico doesn’t stem the migrant surge. That too would be a mess, pushing car prices higher, idling assembly lines and killing jobs. These ideas are all economic losers.

Trump also hinted at, then failed to deliver, a date for inking a trade deal with China—a sign those negotiations could still go off the rails. And the generally strong jobs report contained hints of trouble ahead. For these reasons, this week’s Trump-o-meter reads MEDIOCRE, our third-highest rating.

Source: Yahoo Finance
Source: Yahoo Finance

Economists are less upbeat than Trump about the March jobs report. Capital Economics warned that “employment growth is slowing” and “economic growth will disappoint. We expect the 10-year US Treasury yield to fall further and the S&P 500 to drop sharply.” Yikes.

Here are the signs of a downward trend: Job growth in 2019 is an average 180,000 new jobs per month, down from 223,000 per month in 2018. Manufacturing employment actually fell by about 6,000 workers in March. And the Conference Board points out that the number of temp jobs is declining, “a pattern often associated with economic slowdowns.”

A strong economy has been able to withstand Trump’s protectionist trade policies, but Trump could get dangerously complacent about the economy’s resilience. Financial markets seem to expect a trade deal with China that will reduce the odds of more tariffs on Chinese imports, and perhaps establish a pathway to removing the tariffs Trump imposed last year. Overall, Trump tariffs amount to a tax of $3 billion per month on American companies and consumers.

Trump keeps talking up a trade deal with China—but it keeps not happening. News reports this week suggested U.S. and Chinese negotiators were ready to set a date for a meeting between Trump and President Xi Jinping of China, to finalize a deal. But no date emerged, suggesting major disagreements remain. The Eurasia Group estimates there’s just a 45% likelihood of a meaningful deal with China by the end of June. Other options include a fig-leaf deal that doesn’t change much, ongoing negotiations past July, and a breakdown of talks that leads to more protectionism.

Trump fulminated about closing the southwest border, then backed down as economists pointed out how self-defeating that would be. U.S. and Mexican companies do about $2 billion worth of trade every day, and the economic harm of closing the border would be immediate. Trump would get all the blame for hurting American companies and workers, much like he did with the foolish government shutdown.

Instead, Trump now says he’ll impose his beloved tariffs on automotive imports from Mexico, if America’s southern neighbor doesn’t do more to reduce the flow of migrants. This is a hollow threat, because Trump would be raising taxes on American car buyers and U.S. automakers, which would hurt sales and cost jobs. So he’d hurt Americans in order to hurt Mexico. But for now, the threat of a border closure is off. Celebrating seems premature.

Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available. Click here to get Rick’s stories by email.

Read more:

What Trump needs to win in 2020

Trump’s tax returns won’t be public any time soon

The Mueller probe was money well spent

Why voters will reject the “Green New Deal”

Voters are souring on “Medicare for all

3 problems with Elizabeth Warren’s wealth tax

Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman