WASHINGTON – The U.S. economy is slowing down, with economic growth crawling along at a mere 2% in the fourth quarter of 2019, worsened by Trump’s trade war policies.
Economist Mark Zandi, chief economist at Moody’s Analytics, is keeping his eye on key swing states such as Wisconsin, Michigan and Pennsylvania, where Trump’s trade tariffs have “done a lot of damage” to American manufacturing.
Fourth-quarter consumer spending, which accounts for 70% of economic activity, “slowed to an annual gain of 1.8%,” he added. “While that was still a solid number, it was down from a spending surge of 4.6% in the second quarter and 3.2% in the third quarter.”
“The slowdown was led by a drop-off in new car sales,” writes Martin Crutsinger, economic reporter for The Associated Press.
“Business investment spending also fell for a third straight quarter, dropping at a rate of 1.5%, a decline that has been blamed on business uncertainty generated by rising trade tensions,” he adds. “For the whole year, GDP increased 2.3%, the weakest performance in three years and a slowdown from a 2.9% gain in 2018.”
Forecasts for 2020 aren’t expected to improve anytime soon. Instead, 1.8% slower growth or worse is threatened from a spreading coronavirus flare-up in the face of further trade tensions between the U.S. and China, Crutsinger says.
The widely read Bloomberg economic survey late last year ran an analysis under this headline: “Trump Boasts on Economy Undercut by Weak Middle-Class Pay Gains,” citing the U.S. Census Bureau as its source.
“By several measures, middle-class Americans’ incomes have risen more slowly under Trump than during Barack Obama’s final years – hardly a period renowned for gangbuster pay increases.
Workers should finally be getting big raises with the unemployment rate down to 3.5%,” the newsletter observed near the end of last year.”
“Trump often claims that wage gains have picked up since he took office. But once inflation is factored in, overall progress on wages doesn’t look much different,” the outlet added later. “Real average hourly earnings under Trump have grown at an annual rate of 1.1% through September versus during Obama’s second term.”
Despite Trump’s persistent claims that he has given our country the best economy ever, the statistics don’t support that assertion.
“High-school-educated men still haven’t caught up to their pay in 2000. Their $45,459 median earnings in 2018 was $2,128 lower than their counterparts at the turn of the century. High-school-educated women are further behind, with 2018 median earnings of $32,412, down $2,356,” say the Bloomberg economic researchers.
“Weak pay increases contribute to ‘ambiguous feelings’ about the economy, even as unemployment remains at historic lows,” says Alan Abramowitz, a political science professor at Emory University who studies public opinion and presidential election forecasting.
“What matters politically is the subjective economy, how people feel about the economy,” Abramowitz says. “Real incomes aren’t rising that much, so it’s not obvious that things are that good,” he says.
Donald Lambro has been covering Washington politics for more than 50 years as a reporter, editor and commentator.