Advertisement
U.S. markets closed
  • S&P Futures

    5,209.00
    -5.75 (-0.11%)
     
  • Dow Futures

    39,204.00
    -19.00 (-0.05%)
     
  • Nasdaq Futures

    18,191.75
    -39.75 (-0.22%)
     
  • Russell 2000 Futures

    2,048.00
    -1.80 (-0.09%)
     
  • Crude Oil

    82.59
    -0.13 (-0.16%)
     
  • Gold

    2,164.30
    0.00 (0.00%)
     
  • Silver

    25.32
    +0.06 (+0.22%)
     
  • EUR/USD

    1.0878
    +0.0001 (+0.01%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2728
    -0.0001 (-0.01%)
     
  • USD/JPY

    149.3320
    +0.2340 (+0.16%)
     
  • Bitcoin USD

    65,814.59
    -2,072.15 (-3.05%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,596.29
    -144.15 (-0.36%)
     

This week in Trumponomics: The slowdown continues

There are two ways of looking at the middling jobs report for August.

One is to focus on a distinct slowdown in the pace of job growth. Employers added 130,000 jobs in August, which is okay. But for the year, job growth is averaging 162,000 new jobs per month, a sharp decline from an average of 223,000 last year. The strongest job growth of the last 10 years came in 2014, with 251,000 new jobs per month, on average.

But other trends look better. Wages are up 3.2% year over year, which isn’t fantastic, but wage growth during the last year has stayed consistently above 3% for the first time in 10 years. There was also a modest increase in hours worked in August, reversing a pullback in July. That alleviates concern, for now, about worker cutbacks that might hint a recession is coming.

U.S. President Donald Trump speaks as he receives a status report on Hurricane Dorian in the Oval Office of the White House in Washington, U.S., September 4, 2019. REUTERS/Jonathan Ernst
President Trump at the White House on September 4, 2019. REUTERS/Jonathan Ernst

There was also a bit of optimism this week about the Trump trade war with China. Senior negotiators will meet again, probably in October, a development that sent stock markets upward. Investors are probably too optimistic about the prospects of a trade deal. But the Trump-o-meter is in a generous mood this week, with a reading of MEDIOCRE, the third highest.

Source: Yahoo Finance
Source: Yahoo Finance

In one way, the August jobs report was weaker than it appeared. Those 130,000 new jobs included 25,000 temporary workers for the 2020 Census, bringing the creation of “real” jobs lower. The tepid numbers are consistent with soft GDP growth of around 2%. That’s not the recession scenario some worriers foresee. But it’s not the robust 3% or 4% growth Trump promised, either.

The Trump trade war is becoming a bigger and bigger problem for the U.S. economy, with Oxford Economics estimating that GDP growth could fall below 1% next year if a new set of Trump tariffs goes into effect Dec. 15 as scheduled. Trump has now gone beyond imported factory goods from China and imposed tariffs on consumer products, likely to show up in stores soon as higher prices. With the economy slowing and stimulus from the 2017 tax cuts over, it’s not a great time to chip away at growth with protectionist trade policies.

Markets are optimistic about a deal between Trump and China—probably too optimistic. “It would be foolhardy to get too excited about this new round of negotiations,” research firm Capital Economics advised clients. “Any deal that would see the removal of the tariffs already imposed seems unlikely, at least within the next 12 months.”

China has already refused to agree to Trump’s terms, and as the U.S. economy weakens, so does Trump’s bargaining power. There could be some happy talk after the next round of talks—which will be the 13th—but Trump could grow frustrated by lack of progress and raise tariffs further, as he has before. Every respite from trade turmoil is welcome, but none, so far, has proved to be lasting.

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

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

Read more:

Trump’s biggest gamble yet: tax hikes before an election

The Trump Recession is starting to take shape

Obama was better for your 401(k) than Trump has been

Democrats are blowing it on climate change

Medicare for all won’t work. This might

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

Yahoo Finance All Markets Summit
Yahoo Finance All Markets Summit
Advertisement