U.S Economy in Trump era

Partisan politics in Washington under President Donald Trump are the biggest threat to the U.S. economy, a new survey shows.

The Bankrate.com survey of over 1,000 people released Wednesday shows that 36 percent of Americans believe the divisive political environment could spur economic decline over the next six months. That’s more than the next two perceived sources of fiscal collapse—North Korea’s nuclear program (24 percent) and high interest rates (10 percent)—combined.

“Democrats, college graduates and middle-income households have the strongest distaste for what’s happening in the nation’s capital,” Ted Rossman, public relations director at Bankrate, said in a statement emailed to Newsweek. “Three groups are more likely to fear North Korea than domestic politics: Republicans, Hispanics and Southerners.”

Another NBC News/GenForward survey published Wednesday reaffirmed the distaste over Washington among several demographics across the country. The vast majority of the millennial generation (64 percent) disapproves of Trump, along with African Americans, Asians and Latinos.

Americans have a number of existential crises overseas to choose from—nuclear war with North Korea, Russian attacks on international elections and the global retreat of democracy. But more than anything else, they’re fearing elected leaders will most likely cause harm to their economic wellbeing. Meanwhile, Trump has been attempting to work alongside Democrats to raise the debt ceiling and fund the federal government for just three more months, before lawmakers will be forced to reconvene for negotiations.

The U.S. trade deficit grew slightly in July, as reported this morning by the U.S. Commerce Department. In July, the deficit in goods and services trade was $43.7 billion, up slightly from June and down from the monthly average through the first half of the year of $45.9 billion. Compared to the first seven months of 2016, the cumulative trade deficit year to date is up $28.0 billion, or almost 10%. This is a non-factor for the real economy, but a big political issue for an administration that has made eliminating the trade deficit a major policy goal. It’s a non-factor because, as most economists understand, a nation’s overall balance of trade is determined by underlying levels of savings and investment, not by the “unfair” trade policies of other nations. The United States continues to run a trade deficit with the rest of the world because the rest of the world continues to invest more in the U.S. economy than Americans invest abroad.

Growth of the U.S. economy in the 2nd quarter was stronger than it first appeared, with the Commerce Department revising GDP growth upward to 3.0% on an annualized basis, according to the numbers released in late August by the U.S. Bureau of Economic Analysis. This is a significant milestone for the Trump administration, at least symbolically. President Trump and his economic team have repeatedly identified 3% growth as their goal, with the president’s FY2018 budget depending on a long-term trend of 3% to meet its 10-year targets for revenue growth and deficit reduction. President Trump was premature to read much into this. The U.S. economy achieved 3% annualized growth in five different quarters during President Obama’s second term. President Trump will have met his promise when the economy achieves 3% growth for a sustainable period spanning several years. One quarter does not constitute a change in trend.

Total job growth continued at a pace in August sufficient to keep the overall unemployment rate low, but again it was nothing that would distinguish the Trump economy from the one he inherited. According to the monthly Establishment Survey numbers released last Friday by the Bureau of Labor Statistics, the U.S. economy added a net 156,000 jobs in August. While healthy, the number was well below the average job gains of 214,000 per month in the 2nd Obama term. The current pace of job growth also falls well short of the pace needed to meet President Trump’s longer-term goal of adding 25 million jobs over 10 years.

The brightest facet of the Trump-era economy so far is the manufacturing sector. As candidate and now president, Trump has talked repeatedly about the need to restore the millions of manufacturing jobs that have disappeared in the past 15 years. So far in 2017, according to the same BLS employment survey, the U.S. economy has added a net 137,000 manufacturing jobs, including 36,000 in August. That’s an average monthly gain of 17,100, more than double the average gain of 8,000 during the second Obama administration. The pace falls short of what would be needed to add a million net manufacturing jobs during Trump’s first term, but it is still impressive, especially in light of the longer term trend of declining manufacturing jobs even as real manufacturing output has continue to climb.

The unemployment rate in August continued to hover at a low rate not seen for 17 years, but that is not what President Trump has told us is the important measure. In fact, he’s dismissed the much-cited U3 rate as “totally fiction.” Instead, candidate and now President Trump has focused on the real measure of unemployment, as he sees it: those who are “not in the labor force.” These are the more than 94 million Americans in the adult, civilian, non-institutionalized population who are not employed and for various reasons are not seeking employment. The number includes those who are too discouraged to even look for work, but also those in school, disabled, at home, retired, and elderly. So far in 2017, according to the BLS household survey, also released last Friday, the ranks of the unemployed have fallen since January by 503,000, but those not in the labor have actually increased by 419,000 — from 94.4 million to 94.8 million. The share of adult Americans who are either unemployed or not in the labor force as a share of the total adult population — what the president might call the real unemployment rate — was 39.9% in August, down only a small tick from the 40.1% rate in January. Eight month’s into the Trump presidency, the standing army of non-employed adults remains virtually unchanged.

Finally, the average wages paid to U.S. workers continued to rise but at a rate indistinguishable from recent years. In August, according to Friday’s BLS Establishment Survey, the average hourly wage for U.S. workers was $26.39. That’s a 2.5% increase from 12 months ago. The rate of wage growth so far in 2017 is 2.6%, only slightly better than the 2.3% annual growth in Obama’s second term. While job growth has continued apace under President Trump, it has yet to translate into significantly higher wages.