Trump’s upbeat tweets overstate the country’s economic performance Top News

loading...

Trump’s upbeat tweets overstate the country’s economic performance Top News

President Trump promised an economic boom, and he says it has already begun, touting a bubbly stock market and commitments from high-profile companies to speed up hiring. But beneath the bravado, ominous signs reveal a still-sluggish economy that is unlikely to take off any time soon.

“Stock Market at all time high, unemployment at lowest level in years (wages will start going up) and our base has never been stronger!” Trump tweeted Sunday night, following Monday morning with: “At some point the Fake News will be forced to discuss our great jobs numbers, strong economy, success with ISIS, the border & so much else!”

Trump is correct about the stock market and declining unemployment, which currently sits at 4.3 percent. Business and consumer confidence is high, though both have cooled a bit. Companies are announcing plans to expand and add jobs, such as Samsung’s announcement Wednesday that it would create almost 1,000 new jobs over the next three years with the construction of a new facility in South Carolina.

But other trends are more worrisome. U.S. factory output fell in May, the second decline in three months, due in part to a drop in the production of automobiles. New orders for durable goods, such as furniture, electronics and appliances, were down 1.1 percent, more than expected. And housing starts — the construction of new homes — fell to an eight-month low.

Job and wage growth remain steady and underwhelming. The 362,000 jobs added between March and May is the fewest during a three-month period since mid-2012. And instead of rampant hiring, a number of companies have announced layoffs in recent weeks, including Ford, General Motors, Kellogg’s, and Sears.

And overall, the economy Trump is overseeing as president looks a lot like the one he lambasted as a candidate: a slow, largely steady grind that has chipped away at the damage done by the 2008-2009 recession but that has been insufficient to usher in a new era of prosperity.

Caught between Trump’s promises and an unyielding reality, White House officials are doing a juggling act. They highlight positive trends in the economy while also jawboning Congress into enacting key parts of their agenda. Top advisers are pushing for an overhaul of the tax code that would slash rates, something the White House says will spur more hiring and investment. They are also trying to design a large-scale infrastructure plan that would rebuild roads, bridges, and airports, among other things. But many of those plans have been bogged down by the extended squabbling over how to handle the health care repeal effort. He has had more success slashing regulations, but that hasn’t had a material impact on hiring and growth, several economists said.

Multiple economists have said the White House’s efforts to grow the economy through regulatory changes and coaxing alone have had little impact so far.

“No change,” said Mark Zandi, chief economist at Moody’s Analytics. “Nothing. Not a change.”

White House officials said for the economy to grow as fast as Trump has promised, Congress will have to move quickly to enact his agenda, including the tax cuts and the infrastructure spending. He is also pushing for new bilateral trade agreements and a widespread reduction in regulations.

Senior administration officials said they are aware of the recent spate of mixed economic data. They are keeping a close eye on whether monthly blips become longer-term strains, several said, though they are still optimistic things are improving.

White House National Economic Council Director Gary Cohn, in a statement to The Washington Post, outlined several positive trends in the economy, including the lower unemployment rate, and said things are improving.

“These are all good trends, but we know there is more work to do, including improving wage growth for hard-working Americans,” he said. “We believe this Administration can help drive a better job environment in this country, and that’s why we’re working every day to address burdensome regulations, reform the tax code and restore our nation’s infrastructure.”

Treasury Secretary Steven Mnuchin, asked Thursday about the restrained economic performance so far, said Trump’s promises will take time to come to materialize. “That’s not this year,” he said. “That’s not next year. It will take some time to set in.”

The Congressional Budget Office on Thursday projected that the economy would grow just 2.1 percent this year, an increase from last year but far lower than Trump’s goals. It also projected the economy would begin to slow in 2019 and 2020, growing only 1.6 percent in those years.

When he was sworn in Jan. 20, Trump promised to create 25 million jobs over 10 years and grow the economy at 4 percent per year. Advisers have since scaled that goal back to a target of 3 percent growth, a level many economists consider a long shot.

And many economists, as well as Democrats, have questioned whether Trump’s agenda will grow the economy as much as he says. His call for a major tax cut could spur more investing and hiring, as his aides have said, but critics believe it would more likely grow the federal debt and become a drag on future economic growth. The infrastructure plan, meanwhile, could temporarily add jobs but also add to the government’s debt depending on how it is financed.

Trump inherited an economy with low unemployment and low inflation, but it also had weak wage growth, rising debt levels, an aging population, and a large number of people who weren’t participating in the labor force.

His economic agenda and budget proposals aimed to move people back into the workforce, in part by cutting food stamps and other welfare benefits, but those initiatives have not advanced in Congress.

Economists say that achieving the rate of growth Trump is targeting will be difficult, given underlying changes like the aging of the U.S. workforce and slower productivity growth.

It also remains unclear whether companies that touted plans to hire thousands of workers at the beginning of the year plan to do so. The Japanese company SoftBank promised to invest $50 billion in the U.S. after a meeting with Trump in January, but the status of that investment is uncertain. And three days before Trump was sworn in, Walmart said it would add 10,000 jobs this year. A spokesman said the company is still on track to meet this target.

GVL Poly, a plastics manufacturer with facilities in Kansas and Minnesota, announced this week it was laying off close to 50 employees, nearly 40 percent of its workforce, because one of their top customers was consolidating its supply chain. The company’s chief executive, Allan Cronen, said they are seeing a pretty mixed year, with increased demand from some other customers but “nothing that’s making us do a happy dance.”

Other U.S. companies, big and small, are undergoing their own adjustments. On Tuesday, Memorial Hermann, a hospital and health care company that is the largest employer in Houston, said it was cutting 350 jobs because of higher costs, falling reimbursements, and “a softened local economy.”

“The big dichotomy of our times is that in country after country, the economic news is at once both encouraging and discouraging: Encouraging that economies are expanding; discouraging that growth is disappointing, at least by historical standards,” John Williams, the president of the Federal Reserve Bank of San Francisco, said in a speech in Sydney on Monday.

Harley Lippman, head of an IT consulting company called Genesis10, said CEOs are still cautiously optimistic about tax reform and efforts to rollback regulation, but he said the window is closing for the administration before frustration with Trump might set in among employers.

“People are willing to cut him slack for a little while, but it’s not going to last that long, and people are going to become impatient and disappointed with that administration,” Lippman said.

Trump’s upbeat tweets overstate the country’s economic performance Top News

Source link

Trump’s upbeat tweets overstate the country’s economic performance Top News

527

loading...
author

Author: 

Leave a Reply