The employment report released by the US Bureau of Labor Statistics on 7th April 2017 could be a blow to Trump’s administration on their promise to spark growth in the economy and in job creation. According to the report, nonfarm payrolls grew by only 98,000 new employees; against a projected increase by about 180,000 new employees, according to economists in a survey conducted by Reuters. This sharp decline in job creation numbers came immediately after two months of stellar job creation; that had started to convince the Trump administration and the general public that indeed President Trump’s policies were yielding fruits in the short run.
Trump’s Economic Growth
In January 2017, the US created 227,000 new jobs while in February 2017 the number of new jobs created stood at a higher figure of 235,000. When commenting on the very sharp decline in job creation numbers in March Joshua Shapiro, chief United States economist at MFR, a research firm argued that “January and February were abnormally warm, so they were pumped up, and you had some payback in March exacerbated by the harsh weather.” Other analysts also agree that weather issues may have had an impact on the job creation numbers; with a big snowstorm in mid-March having potentially depressed a lot of activity in businesses across the country. Retail jobs well down by about 30,000 while in the construction sector only 6,000 new jobs were created; compared to 59,000 new jobs that were added to the construction sector in February 2017.
All was not doom and gloom though in the report, with senior executives in the Trump administration opting to emphasize on the positives in the report. Gary D. Cohn, the former Goldman Sachs executive and the current director of the White House’s National Economic Council, choose to emphasize the decline in the unemployment rate in an interview with Fox Business Network saying that, “When you look at the jobs report as a whole, I think there’s an awful lot of good news in here.”
The report contained some good news such as the general decline in the unemployment rate from 4.7% in February 2017 to 4.5% in the March report. This level of unemployment is the lowest in almost a decade and a great milestone in the long stretch out of the Great Depression. The report also indicated that wages continued to generally rise; with an hourly earnings up by about 2.7% on an annualized basis. The rise in wages comes as good news to US households who need to earn more in order to keep up with their sing cost of living and payoff their ever rising average household debt; which accumulates annually from their mortgage, car loans, student loans and credit card loans among others.
No tangible growth experienced yet
The low job creation numbers were however not very welcome to all analysts and business leaders. The fall in the job creation numbers comes to confirm fears from some analysts that the first 100 days for President Trump will not be as a smooth as he expected them to be in terms of delivering on his campaign promises. While Wall Street remained mute on the fall in employment numbers, this seemed to align with their projections that the first quarter of 2017 would grow at about 1%; followed by a 3.5% in this second quarter of 2017. With the low expectations in terms of growth already factored in the pricing of assets, there was not much drop in prices as it would have been experienced had the low job creation numbers been unexpected.
Since President Trump won the elections in November 2016, the stock market has been on an upsurge that has led many to believe the economic recovery promised by Trump during his campaigns would be achieved within a very short period of time. However, as the stock market surge subsides and the disappointing numbers of new jobs stream in, the economic growth in first quarter of 2017 and probably the second quarter appear to be weak. Consumer and business sentiments rose immediately after Trump’s victory but that seem not to be matched by a comparable increase in spending.
“We’ve given up on waiting for hard data to improve,” said Rob Martin, an economist at Barclays. “It’s been five months since confidence increased. If consumption were going to improve, it would have already.” Mr. Martin’s remarks are reflection of the fact that Trump’s presidency is full of rhetoric to raise hopes among the people but nothing tangible is being felt. How far those hopes will hold is unknown; but in the meantime we wait to receive hard data that can prove that Trump’s administration is actually in control of the economic growth in the US.