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Trump claims the US economy is 'incredible' and far from recession - but 4 of his favorite indicators paint a different picture
Trump claims the US economy is 'incredible' and far from recession - but 4 of his favorite indicators paint a different picture
Ben WinckAug 22, 2019, 17:40 IST
President Donald Trump reacts at the end of his speech at a campaign rally, Thursday, Aug. 15, 2019, in Manchester, N.HAP Photo/Patrick Semansky
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Several of the economic indicators the Trump administration showed off in a September briefing have since fallen from their highs, New York Times reporter Jim Tankersley first wrote Tuesday.
Investment in non-residential equipment, small business optimism, and purchasing manager sentiment have all seen a downtrend since the September comments.
A handful of President Trump's favorite economic indicators are turning sour less than a year after he bragged about their performance.
Just 11 months ago, the administration briefed the press with several charts that showed the economy was performing well under Trump. Nearly all of the indicators now show a downward trend, with some falling just after the September briefing, New York Times reporter Jim Tankersley first wrote on Tuesday.
That hasn't stopped the White House from continuing to praise the economy. Trump lauded it as "incredible" on Tuesday before revealing his administration was considering "various tax reductions" to stimulate consumer spending. The president stressed that any tax cut wouldn't represent an effort to invigorate a slowing economy.
"I've been thinking about payroll taxes for a long time," Trump said. "Whether or not we do it now, it's not being done because of recession."
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Here are four indicators that might suggest otherwise, and what their downward trend means for the US economy:
The growth rate in private non-residential fixed investment slumped to 1.4% in the last-recorded quarter. The metric follows money placed in property, equipment, software, and other business-related goods.
It represents the slowest growth in such investment in more than two years, and falls well below what the Trump administration bragged about in the September briefing. The briefing charts showed the measurement growing more than 10% per quarter in early 2018.
Now, private non-residential fixed investment is growing slower than the average quarterly growth rate seen during President Barack Obama's second term, according to the Times.
ISM Purchasing Managers' Index
The Institute for Supply Management publishes a monthly Purchasing Managers' Index that surveys purchasing managers at more than 300 manufacturers to track changes in new orders, production numbers, and inventories.
A contraction in the US manufacturing sector could signal a contracting manufacturing sector, making the PMI one of many closely-watched recession indicators.
Any PMI readings over 50% indicate an expanding manufacturing industry. Results falling under the threshold show the segment is contracting.
After the September briefing showed PMI peaks of about 60%, the metric sharply fell to 51.2% in institute's latest report covering July 2019. The latest reading lands just above recession-level figures.
Small Business Optimism Index
The drop in rosy economic figures isn't confined to large-scale manufacturing. The National Federation of Independent Business publishes a monthly report highlighting, among other data, a seasonally-adjusted small business optimism index.
The figures are based on 10 survey indicators, including plans to increase employment, current inventory, earnings trends, and expected credit conditions.
The index slid after the September briefing from 107.9 to as low as 101.2 at the start of 2019. The figure rose steadily since the start of the year, but still land well below the peaks mentioned in the administration's briefing. The Small Business Optimism Index hit 104.7 in July.
Goods-producing employment
The White House used goods-producing jobs as a symbolic figure for blue-collar workers in the September briefing, the Times reported. The annual growth rate breached decade highs in the middle of 2018 — hitting 3.4% — but promptly fell each month since, hitting an estimated 1.8% in July.
"These additional adjustments in operations at Great Lakes Works are related to ongoing challenging market conditions," US Steel spokesperson Meghan Cox said Tuesday.
The Trump administration levied tariffs on steel in early 2018 in an attempt to give American steel companies an even playing field against foreign producers. US Steel has lost 64% of its market value since the tariffs hit, with sinking prices and dated equipment dragging the company lower.
