A new jobs report that said the economy added a better-than-expected 224,000 jobs in June delivered good news on Friday for President Trump, solidifying the sense that economic growth will be a source of strength for his reelection bid next year.
There was little bad news in the report, which showed job growth in manufacturing, construction and other sectors, as well as a slight increase in wages.
After the economy added just 75,000 jobs in May — a number downgraded on Friday to 72,0000 — there were widespread concerns that the economy might be sliding back and that a recession before the election could even be possible.
Such fears largely dissipated with the new report, leaving Trump sounding a confident note.
“We had great numbers this morning,” the president told reporters. “And our country continues to do really well — really, really well. So we’re very happy about it. I think we’re going to — we’re going to be breaking records.”
The only bad news from the president’s perspective in the strong growth is the possibility it will lead the Federal Reserve to keep interest rates where they are. Trump argues further cuts would turbo-charge the economy, and he has repeatedly criticized the Fed’s rate hikes.
“If we had a Fed that would lower interest rates, we’d be like a rocket ship, but we’re paying a lot of interest and it’s unnecessary,” he said Friday. “But we don’t have a Fed that knows what they’re doing, so it’s one of those little things. But if we had a Fed that would lower rates, you would have a rocket ship.”
The upswing also gives Trump greater leverage in trade battles with the European Union and China, where growth is slowing. The job numbers solidify the sense that the U.S. economy is surviving higher tariffs on U.S. exports, and that China and the EU should negotiate to lower U.S. tariffs on their goods.
Outside analysts expressed wonder at the resilience of the U.S. labor market, which has a 3.7 percent unemployment rate that is historically low. The report also suggested that workers are coming back to the economy in search of jobs.
“That the labor market has managed to expand every month for the past 9 1/2 years should not be overlooked,” wrote Moody’s Analytics managing director Sophia Koropeckyj in a Friday research note. “We are still in an unprecedented period of growth.”
The economy has grown for a record 121 consecutive months as of Monday, when the recovery from the 2008 recession turned a decade old. Though Trump has only been president for 31 of those months, unemployment has dropped to near-record lows and gross domestic product (GDP) has accelerated under his watch.
“While job growth in May and February of this year was well below trend, strong June job growth is a sign that the economy is not in slowdown as it continues to approach full employment,” said Valerie Wilson, director at the Economic Policy Institute, a left-leaning think tank.
The new report and the reaction to it represents a turnaround from just a month ago, when warning clouds for the economy appeared to be gathering.
June began with the dismal jobs report for May, Trump’s surprise threat to impose tariffs on Mexico and rising trade tensions between the White House and Beijing — which raised serious fears about the direction of the global economy.
The Fed opened the door to cutting rates at its June policy meeting after holding rates steady since January. Fed Chairman Jerome Powell cited heightened uncertainty around Trump’s trade battles and the persistence of low inflation.
Trump then pulled back on his threat to impose tariffs on Mexico over immigration, and struck a trade truce with Chinese President Xi Jinping. The non-escalation pact is far from a full agreement, but the pause on further tariffs helped clear a path toward an end to the yearlong trade war.
The truce also boosted optimism among investors about the prospect of a trade deal, sending the Dow Jones Industrial Average, S&P 500 and Nasdaq to record highs during an abbreviated Wednesday session.
Even so, stocks took brief loses after the Friday jobs report, likely because the hiring increase may narrow the chances of a Fed rate cut.
Larry Kudlow, director of the White House National Economic Council, said in a Friday interview that the Fed should slash borrowing costs as a hedge against slowing growth abroad.
“With a weak global economy, taking out an insurance policy is not a bad thing,” Kudlow told Bloomberg TV.
Trump may still get his desired rate cut when the Fed meets on July 30-31, even as the domestic economy improves. Though trade tensions with China have eased, Trump has expressed comfort with raising and maintaining tariffs on Chinese goods in lieu of an actual trade deal.
Trump’s renegotiated North American Free Trade Agreement has also stalled in the House, prompting fears he could pull out of the original pact. And Trump is also approaching a deadline to decide whether to impose tariffs on imported automobiles.
“The central bank may still attempt to mollify investors by putting a modest, so-called insurance cut in place,” said Mark Hamrick, senior economic analyst at Bankrate.com.
“The array of headwinds associated with slowing global growth, trade disputes and tariffs haven’t gone away,” he said.
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