Thursday, February 21, 2019

Not feeling the "Trump Boom"? That's because much of the country isn't having one

When I was looking at Wisconsin’s bad performance in the “gold standard” Quarterly Census of Employment and Wages (QCEW), something else jumped at me in the press release. I noted that a lot of many states seem to be left out of the alleged “Trump Boom” of 2018.

If you go top the end and check out the state rankings in job growth, you’ll see a whole lot of states with less than 1% job growth in a time period when the US had much faster job growth as a whole (1.63%). And that was especially true in the Midwest.

Job growth, QCEW Sept 2017 - Sept 2018
Number of states at or above US rate of growth: 14
Number of states below US rate of growth: 36
Number of states with 1.0% job growth or less: 25
Number of Midwest states in bottom 1/2 of job growth: 7 out of 7.

Ehh, don't be so sure.

In addition, we recently found out that the “manufacturing rebirth” that Trump promised blue-collar Americans isn’t as robust as what we were first told. At the end of 2018, the Bureau of Labor Statistics said that 284,000 jobs were added in manufacturing for that year, and 491,000 in the 2 years Trump had been in office. But if you look at the now-benchmarked numbers, that number is noticeably less.

Manufacturing job growth, US. Original report vs revised benchmarks
2017 reported +207,000
2017 revised +190,000

2018 report +284,000
2018 revised +264,000

Total revisions -37,000

That’s still pretty good - in fact, 2019 had the biggest one-year growth in manufacturing jobs that we’d seen in the US in 22 years. But it’s not as good as we were told, and conversely, the lower-wage “leisure and hospitality” sector (generally hotels, restaurants and bars) had their job gains revised UP by 43,000 for 2018.

Moving into 2019, economic reports on manufacturing that dropped on Thursday indicate that this 2-year uptick is growth may be leveling off.
The headline index from the Philadelphia Fed’s Manufacturing Business Outlook Survey registered a surprise decline of 4.1 in February, below expectations for a reading of positive 14, as both new orders and shipments indices dropped. This was the index’s first negative reading since May 2016. Firms included in the regional Fed’s survey, however, did report increases in employment for the month, and an index measuring future conditions showed firms were generally optimistic abut the next six months.

The U.S. manufacturing purchasing managers’ index released by IHS Markit registered a decline to 53.7 in February from 54.9 in January, coming below expectations of a reading of 54.8. While the reading above the key level of 50 still indicates expansion in the sector, this was the slowest improvement in business conditions since September 2017, IHS Markit reported.
Combine these statistics with the generally subpar job growth in the Midwest, and Trump’s big talk to rebuild the Rust Belt isn’t quite working out in the real world. Now combine that reality with the increasing understanding that the Trump-signed GOP Tax Scam is making many Americans write checks to the IRS while the US budget deficit continues to blow up (the deficit was up nearly 50% in the last 3 months of 2018 vs the same time in 2017, and income taxes from individuals and corporations were down a combined $25 billion).

And a disproportionate amount of those check-writers who will be screwed over by the Tax Scam’s limiting of the State and Local Tax (SALT) deduction are concentrated in Wisconsin and other Midwestern states.

The anger over the Tax Scam is already bubbling and becoming apparent, and a 30-cent increase in gasoline in the last month can’t help when people are already seeing less money in their pocket than what they’re used to. Keep an eye on whether the significant drop in retail sales for December is a sign of other slowdowns in consumer spending for 2019.

So if you’re confused about why the stock markets keep going up and the economy is alleged to be on strong footing, you may have good reason to be, because your part of the country is likely being left out of it. You wonder when it sinks in that the GOP’s claims of a strong economy are met with a giant response of “BULLSHIT” in the parts of the country they can’t afford to lose in 2020, and drives Trump’s already-low approval ratings even lower.

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