NEW YORK – The 4th of July weekend is over. Hope you all enjoyed the barbecue and fireworks over the long weekend, as America celebrated freedom and independence. Of course, as I write this, another weekend is looming up. There’s more opportunity to spend time with family, friends. Enjoy the summer. It remains to be seen how long the party will last for the country, though.
On the economic front, there’s plenty to cheer, and reflect upon, too.
The Labor Department released the June hiring and unemployment figures, today, on Friday. The good news is that hiring remains strong, even beating Wall Street predictions: 222,000 jobs were added in June, compared to Wall Street economists’ expectations of 175,000.
Compared to the unemployment rate of 4.8%, when President Donald Trump assumed office in January of this year, it’s at a low of 4.4%, as of June. It’s an uptick from May, which was at 4.3%.
The New York Times noted that the labor-force participation rate inched up to 62.8%, from 62.7%, though critics argue and harp on the fact that many workers have quit looking for jobs, even though we are now eight years done with the recession, during which unemployment figures were double of what it’s today. However, there’s clear indication now that many more people are joining the workforce in rapid numbers.
That sure augurs well for the economy, which for many seems tentative as there’s news of traditional workforce strongholds like retail stores collapsing all over the country, in the face of competition from online shopping.
Diane Swonk, founder of DS Economics in Chicago, in an interview to The Times said increase in professional jobs reflected hiring of new graduates.
“Finally the millennials are getting more jobs,” she said.
Mic, however, reported that while the big problem for workers is that even while job growth has been solid, increases in Americans’ pay have not been as healthy as expected, quoting Cathy Barrera, a Cornell professor and economist at ZipRecruiter.
Not all economists and writers are hunky dory about the US economy, though.
The Business Insider, in a piece a day after July 4th, noted that despite a surge in optimism after the election, nominal GDP growth in 2016 was just 2.95%. This makes 2016 the second-worst year on record since 1959.
The Business Insider report cited four factors for a ‘stalling’ US economy: credit demand is contracting, tax receipts turn negative, the Fed is tightening monetary policy, and a flattening yield curve.
And for those going gaga over the ever towering stock markets, Rex Nutting of MarketWatch has a word of caution: over the past 25 years, the Dow has risen in 187 of past 300 months. That’s 62% of the time.
So, the Dow going up is nothing to really be totally upbeat about, seems to be the sentiment, with the lurking danger of quick profit turning to hopeless disaster in a matter of days, always at the back of minds of investors if they stray too far away from their comfort zone.
Nutting, however, does give Trump credit on a few fronts: in the first four months of Trump’s presidency, real disposable incomes rose at a 4.4% annual pace, compared with a 2.7% annual rise in Obama’s last four years.
Also, in the first four months of Trump’s term, real spending has risen at a 2.7% annual rate, the same as the 2.7% annual growth in Obama’s last four years. Manufacturing output – one of Trump’s major thrusts in his campaign – rose at a 0.9% annual rate in the first four months, compared with a 0.6% average in Obama’s last four years.
Nutting surmised by pointing out what most voters today are now gearing up for: “The real judgment will come from how voters feel about their economic situation when they head to the polls next year and in 2020. People know in their gut whether they and their children have the opportunity to prosper, or whether they are still being marginalized economically.”
Then, of course, there’s always fear of a major war breaking out. Despite all the rhetoric about Russia and China, they remain mere economic affronts. North Korea may prove to be the real bad boy, create chaos.
While critics may attack the US on its protectionist policies, the fact remains that because of high-quality workforce already present within its borders, for now, the country need not worry too much about it. Foreign workers continue to stream into the US at the same rate as during Obama’s eight years in office.
Businesses in the US are finding it increasingly hard to get workers for lower paying jobs, though.
(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him: firstname.lastname@example.org follow him on Twitter @SujeetRajan1)