Jobs Fuels Economic Momentum for Trump Ahead of Election
America’s jobs engine roared in January and wage gains rebounded, offering fresh momentum for the economy and a tailwind for President Donald Trump at the start of the election year.
Payrolls increased by 225,000 after an upwardly revised 147,000 gain in December, according to Labor Department data Friday that topped economists’ estimates. The jobless rate edged up to 3.6%, still near a half-century low and reflecting more Americans entering the workforce, while average hourly earnings climbed 3.1% from a year earlier.
The figures help support the president’s description of a “booming” job market during this week’s State of the Union address. While Boeing Co.’s production halt on the 737 Max airplane and the coronavirus outbreak are likely to weigh on the economy in coming months, a resolution of those issues by midyear could perk up growth just before voters head to the polls in November.
A strong labor market and record-high stock prices have helped boost Americans’ views of their finances to all-time highs. Nearly six in 10 Americans say they are better off now than they were a year ago, as 74% said they will be even better off next year, according to a Gallup poll out earlier this week.
“If the job market continues to perform as it is today on election day, it should be a tailwind to the president’s re-election,” said Mark Zandi, chief economist at Moody’s Analytics. He cautioned, though, that the labor market in swing states will be more important to Trump’s prospects, as places like Pennsylvania, Michigan and Wisconsin have showed weakness related to manufacturing.
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Investors were focused on the spread of the coronavirus Friday, as U.S. stocks declined from a record, the dollar was up and yields on the 10-year Treasury were lower.
A key positive from Friday’s report was a pickup in the participation rate, or the share of working-age people in the labor force, to a more than six-year high of 63.4%. Among prime-age workers, or those ages 25 to 54, the share is the highest since 2008. The employment-population ratio was also at an 11-year high.
Steady gains in the participation rate reinforce Federal Reserve Chair Jerome Powell’s desire to sustain the expansion “so that the strong job market reaches more of those left behind.” It also means the outlook for jobs growth and the economy remains bright.
“If there’s more capacity for labor force expansion, it means that the business cycle has longer to run,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “We’re not as late in the cycle as maybe some people had feared.”
White House chief economic adviser Larry Kudlow said the employment-population ratio remains below an earlier peak in 2006 and has room to gain.
“You could have as many as six million more workers in this country ready to come back to work and rejoin the labor rolls,” Kudlow said Friday on Bloomberg Television.
Annual revisions to historical data did take some shine off recent years’ job growth, cutting the 2018 job gain to 2.31 million from 2.68 million. The 2017 and 2019 gains were about 2.1 million, meaning each year under Trump -- while still strong -- has been slightly slower than the 2.35 million rise in the final year of the Obama administration.
At the same time, “over 2 million in the 10th year of an expansion is remarkably strong,“ said David Berson, chief economist at Nationwide Insurance.
What Bloomberg’s Economists Say
The underlying hiring trend is robust, providing a sturdy foundation for domestic growth. However, this is due to be challenged in the relatively near term by weak global growth in general and coronavirus supply-chain disruptions in particular.
-- Carl Riccadonna, Yelena Shulyatyeva and Eliza Winger
Despite the revisions, the report shows the economy has retained strength, which Trump has heralded as a key tenet of his re-election campaign. While weaker business investment and signs companies are having trouble finding workers have helped spur expectations for slower job growth, the latest figure exceeded the 175,000 average monthly gain for 2019.
Even so, January’s job strength also reflects robust gains in weather-sensitive sectors including construction, which climbed by 44,000 for the strongest growth in a year in an unseasonably warm month.
Not all of the labor figures are so strong. Weekly hours worked held at 34.3 hours for a third month, matching the lowest level for most of the past decade. Economists look to hours worked for early signs of labor market softening as companies often cut hours before laying off workers.
In addition, the drop in payrolls for manufacturers was steeper than estimated. Employment in the sector slumped by 12,000 for a third drop in four months, driven by a decrease in payrolls for motor vehicles and parts workers.
(Disclaimer: Michael Bloomberg is seeking the Democratic presidential nomination. He is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
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