Is the U.S. economy out of the woods?

(Image credit: BRYAN R. SMITH/AFP via Getty Images)

published 14 December 2019

"There was plenty to like about the November jobs report," said Justin Lahart at The Wall Street Journal. The Labor Department reported last week that the U.S. economy added 266,000 jobs last month, the most since January, while the unemployment rate slipped to 3.5 percent, matching a 50-year low. "The report puts to rest any worries that employers, facing geopolitical worries and thinning profit margins, are pulling back on hiring," and consumer spending continues to surge into the holiday season. The report did contain a few mysteries: Wage growth is "decent," but not as high as we might expect. And the share of the adult population in the labor force — called the participation rate — actually ticked down, suggesting "people out of the workforce lack the skills employers are looking for." Nonetheless, "it feels churlish to complain when the big-picture numbers are so good," said Neil Irwin at The New York Times. Not too long ago, economists were saying the economy was already at full employment and that interest rates needed to be much higher to ward off inflation. It's turned out the economy still had plenty of room to expand, and we still don't know "how strong the U.S. economy can get."

Analysts don't all agree that the economy is out of the woods yet, said Paul Davidson at USA Today. "President Trump easily could impose consumer-related tariffs next year" — clouding the picture with more uncertainty — "if China doesn't make concessions toward a bigger agreement." And much of last month's acceleration in jobs was in the health-care sector, "a hiring spree that's unlikely to be repeated in the months ahead." For the average worker, "the odds of finding a job may be good, but good jobs are an oddity," said Eric Levitz at New York Magazine. The U.S. has shed at least 2.9 million manufacturing jobs since 2000, along with 2.1 million administrative and office-support roles — those clerical positions that once served as "a route to lifelong economic security" for non-college-educated women. And "for middle-aged workers who had built careers in the field, this has meant sudden and harrowing downward mobility."

Still, there's one clear lesson in these numbers, said Chris Cillizza at CNN: "Donald Trump has a path to win a second term next year." Past elections have shown that "it's very, very hard to beat an incumbent president unless the economy is seen by a majority of the public to be weakening badly," and there's no sign of that now. In 2016, the economy was "the most pressing issue" for 52 percent of voters. Such numbers would suggest "Trump is going to cruise to a second term, except that he is Trump" and he's incapable of staying on message. Americans, though, can see the message the economy is sending for themselves, said The Wall Street Journal in an editorial. "In Ames, Iowa, the unemployment rate is 1.3 percent," while Rust Belt cities are attracting new investments in health care. The National Retail Federation reported that American spending on Black Friday and Cyber Monday was up 16 percent from the year before. "This isn't because billionaires are buying more yachts. This is because Americans in Ames and Cleveland are faring better and spending more."