After a sluggish start this year that had sparked fears of recession, the U.S. economy has taken a sweeping turn for the better: Consumer spending has picked up, stocks are back at record levels and the outlook for trade has brightened along with the global economy - a big political advantage for incumbent President Donald Trump just as the 2020 presidential campaign begins to intensify.
Confirmation of the good news came Friday with the latest monthly jobs numbers, showing the economy produced 263,000 new jobs last month, average wages rose at a solid pace, and the nation's unemployment rate fell to 3.6 per cent. That's the lowest in almost 50 years.
The number of jobs in the economy has now grown for 103 months - a record - at a remarkably steady rate through two very different presidencies.
Stocks are at or near record levels, too, as the president often notes.
The news bolstered President Donald Trump, for whom a strong economy provides a necessary - but perhaps not sufficient - basis for reelection. Trump cheered the report, declaring in a Twitter message: "JOBS, JOBS, JOBS!"
"When we have an economy that maybe is the best economy we've ever had, people tend to like you," Trump said Friday during a meeting with the visiting prime minister of Slovakia.
"I'll be running on the economy," Trump declared on Friday. And why wouldn't he?
The president's chief economic adviser, Larry Kudlow, said the United States has entered "a very strong and durable prosperity cycle." He gave all the credit to his boss: "He is president of the whole economy."
By most measures, the U.S. economy is in solid shape. It is expanding at a roughly 3% pace, businesses are posting more jobs than there are unemployed workers and wage growth, long the economy's weak spot, has picked up.
All these trends are helping lift a broader swath of the population than in the first five years or so after the Great Recession.
Low-income workers are actually seeing healthy wage gains — larger than everyone else's. In March, the poorest one-quarter of workers were earning 4.4% more than a year earlier, according to data compiled by the Federal Reserve Bank of Atlanta. The richest one-quarter were up 3%.
Lower-income workers had started to outpace their higher-paid counterparts in 2015, so it's not a Trump phenomenon. And part of the increase has occurred because of minimum wage hikes by more than two-dozen states. The news isn't good for everyone.
All that deepens two of the great conundrums of the Trump presidency: How does his approval rating stay so bad when the economy is so good, and what might that forecast about his prospects for reelection?
Indeed, "a normal president with these economic numbers would have job approval somewhere in the vicinity of 60 percent," said Republican pollster Whit Ayres. "But Donald Trump is a nontraditional president, and he has, at least at this point, severed the traditional relationship between economic well-being and presidential job approval."
Currently, an average of just over four in 10 Americans approve of Trump's performance in office, a number that has fluctuated in a very narrow range since early in his presidency.
"That said, a good economy obviously helps a president running for reelection," Ayres said. "We have to see if it helps Donald Trump as much as it would have helped a traditional president."
At least since the end of World War II, economic growth rates have lined up strongly with the vote share received by the president's party.
Ray Fair, a Yale University economist who uses economic data to model election outcomes, says that the state of the economy in the first three quarters of an election year matters more than the rest of a president's term.
Fair's model points to a Trump victory in 2020, should the economy continue along its current path.
However, "This doesn't take into account the personalities," Fair said. "Trump is an unusual person."
At this point, 18 months before Election Day, Trump's political standing is far weaker than the economic numbers would suggest.
The latest CNN poll finds 43% of Americans approve of the way he is handling his job as president. That's even as 56% say they approve of his handling of the economy, marking a high for the president since he took office.
He receives lower marks for other issues, including health care, immigration and foreign policy.
Specific candidates aside, the General Social Survey, a respected nationwide survey, has found that the share of Americans feeling satisfied with their finances has returned to pre-recession levels.
In 2018, about a third expressed satisfaction with their financial situation, up from 23% in 2010. About 4 in 10 said their finances had been improving over the previous few years, while just 15% felt them worsening.
In 2010, more than twice as many said their financial situations were getting worse.
Two factors appear to have held down Trump's ability to benefit as much as his predecessors might have: his personal conduct and the nature of the current economy.
A large share of American voters find Trump repugnant, and for them, no amount of good economic news will change their view. They're numerous enough to make a close election in 2020 highly likely.
Beyond that, the uneven nature of current prosperity gives Democrats an opening to argue for spreading the wealth more equitably.
"The moral obligation of our time is to rebuild the middle class. When the middle class does well, everyone does well," former Vice President Joe Biden, the current Democratic front-runner, told audiences in Iowa this week. Regardless of whom the Democrats nominate, the candidate likely will use some form of that argument.
It's a case that finds a receptive audience among many voters. A recent Washington Post/ABC poll found that by nearly 2 to 1, Americans said "the economic system in this country mainly works to benefit those in power," rather than "all people." Democrats overwhelmingly took that view, but so did about a third of Republicans, the poll found.
Workers in metro areas are still getting larger pay increases than those in smaller towns or rural areas, according to the Atlanta Fed's data. In fact, that gap that has widened since Trump was elected.
And overall income inequality hasn't narrowed. The richest 5 percent of Americans earned 3.4 times a median worker's pay in 2018, according to the left-leaning Economic Policy Institute. That's up from 3.3 times as much in 2016.
Last month, the government report said, the African American unemployment rate was 6.7%, up from a record-low 5.9% last May. That's more than double the rate for whites. And in 2017, according to the latest data available, the black-white income gap widened, with the typical African American household earning $40,258, while the equivalent white figure was $68,145. Still, the Asian and Latino unemployment rates hit or matched record lows in April.
By some measures, the job market has been better in the past.
A much smaller proportion of Americans are working than in the late 1990s, the last time unemployment was nearly this low. Part of that is because the United States is aging and baby boomers are retiring.
But even among workers aged 25 through 54, which filters out the impact of retirement and increased college attendance, a smaller percentage of people are working: In April 79.7% had jobs. That figure peaked at 81.9% back in 2000.
But the Democrats who are fighting to deny the Republican president a second term are beginning to acknowledge the weight of their challenge: Since World War II, no incumbent president has ever lost reelection in a growing economy.
Even Trump's critics are forced to admit the state of the economy could help him at the ballot box.
"Relative to all the other terrible aspects of Trump's record, the economy is more of an asset to him," said Geoff Garin, a veteran pollster whose clients include Priorities USA, the most powerful super PAC in Democratic politics.
Amid the largely positive news for Trump, friends and foes alike question whether he can stay focused on the economy as the 2020 contest plays out. Blessed with similarly positive news in the past, he has veered into more controversial topics like immigration, the Russia investigation and personal attacks against his rivals.
Democrats, in fact, are counting on him to change the subject.
"The economic indicators would normally be incredibly positive for an incumbent president," said Jefrey Pollock, the pollster for Democratic Sen. Kirsten Gillibrand's presidential campaign. However, the pollster said hopefully and somewhat rudely, "He can't shut his mouth."
Still, Trump had been noticeably worried in the fall and earlier this year by the talk among economic forecasters about a rising risk of recession, and those worries dissipating has been a great relief to the White House.
"Viewed from today's perspective, the beginning of the year seems like just a bad dream," said Carl Tannenbaum, chief economist for Northern Trust in Chicago.
Earlier in the year, Tannenbaum had put the odds of recession in 2019 at 33 percent. He's since lowered that to less than 20 percent, and even that is partly because of statistical reasons.
The last recession ended in June 2009, making the current economic expansion close to 10 years old. In July, the economy will almost certainly break the record for the longest period of sustained growth in U.S. history. But no economic law requires economic recessions to die of old age. Some countries with smaller economies have gone decades without a recession.
Douglas Holtz-Eakin, an economist and president of the conservative-leaning American Action Forum, said that the jobs report "should put to rest the notion that the economy is doomed to falter in 2019," although he added that he "could easily see it in 2020."
"The chances go up, and the biggest source would be a policy error," he said, noting two possibilities in which Trump might help cause a downturn: a trade war or another budget battle in the federal government.
Things looked bleaker a few months ago than they actually were because of the partial government shutdown, which lasted a record 35 days into late January. The shutdown deepened pessimism that had set in from December's stock market woes.
Anxieties about the slowing Chinese economy, aggravated by a trade war with the United States, had also rattled global markets earlier this year.
More recently, however, China's growth appears to have steadied, thanks partly to government support and an easing of tensions with the U.S. The administration and Chinese leaders have stepped up negotiations toward a possible trade deal. A big Chinese delegation headed by Beijing's top economic minister is expected to arrive in the U.S. next week for what could be a wrap-up in talks.
The outlook for Europe has improved as well, at least for the moment. Europe's central bank has resumed stimulus measures to prop up the continent's growth, and Britain's tortured exit from the European Union, or Brexit, has been put off until the fall.
But the U.S. economy still has some soft spots. Manufacturing employment has cooled this year after two years of solid growth. And the decline in unemployment last month, from 3.8 per cent in March, was in part due to a drop in the number of unemployed workers looking for jobs.
Another point of uncertainty involves how long the steady job growth can continue. Recent job and wage gains have benefited many lower-educated workers as well as formerly disabled workers, who have come off the sidelines to fill positions. And older workers are staying in the labor market, helping to meet employer demands.
But no one knows how much lower the unemployment rate can fall or when employers will hit the wall.
Ben Herzon, economist at Macroeconomic Advisers, a leading forecasting firm, shares the view of most other economists that the economic growth rate will drop from last year's 3 percent to about 2 percent this year, roughly the average over the last 10 years. That's a healthy rate, he said, but he and other economists worry about the tightened labor market and the possibility that the economy may be reaching capacity.
The Federal Reserve at the start of the year halted its interest rate hikes because of concerns of slowing growth. Some investors -- and notably also Trump -- have called for the Fed to cut rates again. The Fed this week kept rates steady, and the new jobs report makes further cuts unlikely.
But if signs emerge of the economy overheating, the central bank could pivot back again to raising rates.
"The economy right now is in a good spot," Herzon said. "But there is a concern that the economy is at capacity, and if you push it harder, that's where we could get into problems."
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