Washington: Divisive rhetoric and character attacks aside, it is the state of the US economy that likely will make or break the presidential bids of Hillary Clinton and Donald Trump, and the July employment report this week will be a key element with less than 100 days to go until the elections.
Coming on the heels of a sluggish second-quarter GDP report, which showed the US economy expanded by just 1.2 percent, better than the first quarter’s 0.8 percent but still well below the pace of the last two years, a disappointing result for jobs growth could set the narrative for the Trump campaign.
“The numbers are horrendous,” the Republican candidate said of the economy. “1.2 percent, 1.2, we’re sinking.”
Sinking may be overstating it — the first quarter of 2014 was the last time the US economy contracted — but as The Wall Street Journal reports the pace of this expansion has been by far the weakest of any since 1949.
The economy has grown at an annual rate of only 2.1 percent since the recession ended in June 2009, compared with annual growth of 4.3 percent during the economic expansion from 1982 to 1990.
And even with an unemployment rate of 4.9 percent, a Gallup poll found that 60 percent of Americans think economic conditions in this country are “getting worse.”
The US Labor Department releases the July jobs report Friday, and the consensus among economists is for nonfarm employment to increase by 185,000 payrolls, after a 287,000 surge in June. Payrolls have increased an average of 147,000 a month in the latest three-month period, which includes the dismal performance in May.
Meanwhile, economists expect the unemployment rate to dip down one-tenth point to 4.8 percent.
The ADP payroll services firm said Wednesday that private-sector employment in July rose 179,000, just slightly higher than June. Based on payroll data from client companies, the report is not a perfect match to the government data but is frequently used as a forecast tool and shows continued strength in employment.
– Job growth seems solid -Economists, as well as the Federal Reserve, agree the news is mostly upbeat.
“Apart from the specific signal for this week, the ADP data continue to suggest that the trend in employment growth remains fairly strong — strong enough to keep the unemployment rate trending down,” Jim O’Sullivan, chief US economist for High Frequency Economics, said in a research note.
And Mark Zandi, chief economist of Moody’s Analytics, said: “Job growth remains strong, but is moderating as the economy approaches full employment.”
He noted that rather than workers having trouble finding jobs, “businesses are having a more difficult time filling open job positions, which are near record highs. The nation’s biggest economic problem will soon be the lack of available workers.”
In its monetary policy statement July 27, the Federal Open Market Committee stated that since June data indicates “the labor market strengthened and that economic activity has been expanding at a moderate rate,” which prompted the committee to keep its key policy interest rate on hold.
Another hot-button issue in the presidential campaign is US manufacturing jobs, and not without reason: Service-sector jobs increased by 185,000 in July, while manufacturing saw a decline of 6,000, the ADP reported. The Labor Department said private services jobs increased 256,000 in June, out of the total increase of 287,000.
Both Trump and Democratic rival Clinton have promised to bring manufacturing jobs back to US shores, even pledging to torpedo trade agreements like the Trans-Pacific Partnership to do so.
Strong job growth in coming months could boost Clinton’s case that the economy is gradually rebounding. But another weak report will give fuel to the Trump campaign that radical change is needed to help Americans feel confident in the economy.