Despite bravado and big promises, the economy that President Trump is touting this week looks a lot like the one he lambasted as a candidate: a slow, largely steady grind that has chipped away at the damage done by the 2008-2009 recession but failed to produce the prosperity of decades past.
Now, as he approaches the six-month marker of his presidency, Trump faces several new warning signs that key areas of the economy could be losing steam, including in industries he specifically promised to revitalize.
Meanwhile, the legislative packages that Trump promised would deliver his economic boom, including a rewrite of the nation’s tax code and a massive investment in infrastructure, are nowhere to be seen, languishing in a deadlocked Congress.
“Stock Market at all time high, unemployment at lowest level in years (wages will start going up) and our base has never been stronger!” Trump posted on Twitter on Sunday night. He reiterated the message in another post Monday afternoon: “Really great numbers on jobs & the economy! Things are starting to kick in now, and we have just begun! Don’t like steel & aluminum dumping!”
Indeed, the unemployment rate has dropped from 4.8 percent to 4.3 percent under Trump’s watch, and the stock market is hitting record levels. Business and consumer confidence is high, though both have cooled recently. Companies are announcing plans to expand and add jobs, such as Samsung’s announcement last week that it would add almost 1,000 jobs over the next three years with the construction of a facility in South Carolina.
But there are troubling undercurrents. Automobile sales, the heart of the manufacturing economy, are in a months-long swoon. Both General Motors and Ford on Monday reported that their sales had slid 5 percent in June as the industry’s workers continue to be hit with layoffs. U.S. factory output fell in May, while new orders for durable goods such as furniture, electronics and appliances declined, as well. Construction of new homes fell to an eight-month low.
Overall, the 362,000 jobs added from March to May are the fewest during a three-month period since mid-2012.
“It’s difficult to say the economy is doing well overall,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “At this point, we’re still struggling to see a more robust recovery after years and years of lower growth . . . We’re still treading water and struggling to get to that 2 percent [economic growth] on a consistent basis.”
Piegza said she believes there is a sense of “pessimism fatigue . . . There’s a sense where, it’s not fantastic, but this may be as good as it gets, so let’s celebrate mediocrity,” she said.
Caught between Trump’s promises and an unyielding reality, White House officials are highlighting positive economic trends while also urging Congress to enact key parts of their agenda. Top advisers are pushing for an overhaul of the tax code that would slash rates, something the White House says would spur more hiring and investment. They are also trying to design a large-scale infrastructure plan that would rebuild roads, bridges and airports, among other things.
Visible progress on those plans, however, has been near-nonexistent, with Republicans’ summer agenda dominated by disagreements over how to repeal and replace the Affordable Care Act and looming budget and borrowing crises ready to command Congress’s attention in the fall. Trump has had more success slashing regulations, but that has not had a material impact on hiring and growth, several economists said.
“Optimism and jawboning really can’t significantly alter the fundamental investor realities for these companies,” said Mark Muro, a senior fellow at the Brookings Institution. Firms face difficult hiring and layoff decisions because of weak economic growth, he added.
White House officials believe that for the economy to grow as fast as Trump has promised, Congress will have to move quickly to enact his agenda, including the tax cuts and the infrastructure spending. He is also pushing for new bilateral trade agreements and a widespread reduction in regulations.
Senior administration officials said they are aware of the recent spate of mixed economic data. They are keeping a close eye on whether monthly blips become longer-term strains, several said, though they are still optimistic things are improving.
National Economic Council Director Gary Cohn, in a statement to The Washington Post, outlined several positive trends in the economy, including the lower unemployment rate, and said things are improving.
“These are all good trends, but we know there is more work to do, including improving wage growth for hardworking Americans,” he said. “We believe this Administration can help drive a better job environment in this country, and that’s why we’re working every day to address burdensome regulations, reform the tax code and restore our nation’s infrastructure.”
Treasury Secretary Steven Mnuchin, asked Thursday about the restrained economic performance so far, said Trump’s promises will take time to materialize. “That’s not this year,” he said. “That’s not next year. It will take some time to set in.”
The Congressional Budget Office on Thursday projected that the economy would grow just 2.1 percent this year, an increase from last year but far lower than Trump’s goals. It also projected the economy would begin to slow in 2019 and 2020, growing only 1.6 percent in those years.
When he was sworn in Jan. 20, Trump promised to create 25 million jobs over 10 years and grow the economy at 4 percent per year. Advisers have since scaled that goal back to a target of 3 percent growth, a level many economists consider a long shot.
Many economists, as well as Democrats, have questioned whether Trump’s agenda will grow the economy as much as he says. His call for a major tax cut could spur more investing and hiring, as his aides have said, but critics believe it would more likely grow the federal debt and become a drag on future economic growth. The infrastructure plan, meanwhile, could temporarily add jobs but also add to the government’s debt depending on how it is financed.
Trump inherited an economy with low unemployment and low inflation, but it also had weak wage growth, rising debt levels, an aging population and a large number of people who were not participating in the labor force.
His economic agenda and budget proposals aimed to move people back into the workforce, in part by cutting food stamps and other welfare benefits, but those initiatives have not advanced in Congress.
Economists say achieving the rate of growth Trump is targeting will be difficult, given underlying changes such as the aging of the U.S. workforce and slower productivity growth.
It also remains unclear whether companies that touted plans to hire thousands of workers at the beginning of the year plan to do so. The Japanese company SoftBank promised to invest $50 billion in the United States after a meeting with Trump in January, but the status of that investment is uncertain. Three days before Trump was sworn in, Walmart said it would add 10,000 jobs this year. A spokesman said the company is on track to meet this target.
U.S. companies large and small are undergoing adjustments. On Tuesday, Memorial Hermann, a hospital and health-care company that is the largest employer in Houston, said it was cutting 350 jobs because of higher costs, falling reimbursements and “a softened local economy.”
Harley Lippman, head of an IT consulting company called Genesis10, said chief executives are still cautiously optimistic but that their patience could soon run short.
“People are willing to cut him slack for a little while, but it’s not going to last that long, and people are going to become impatient and disappointed with that administration,” Lippman said.