Good News Got Better!
It’s official: the United States of America is now experiencing the longest economic expansion in its history.
Last Friday’s US report on jobs brought still more great news about the economy there. This is not just good news; this is great news.
There are two things involved in any figures around economic growth. Namely, how much the U.S. economy produces from one year to the next and, then, as a result, how much more income Americans have relative to the previous year.
So the latest figures from the Federal Labor Department tell us that the US economy added 224,000 jobs last month. This proved more than even the wildest expectations of some – and that hung around the hope of 165,000 jobs being created.
In addition, wage growth remains strong. That’s at above 3% year-over-year, for the 11th month in a row.
So let’s put those two facts – no “fake news” about it – together. Almost a quarter of a million jobs have been created in a month, and, for almost a year, wage increases have been growing much better than inflation – currently running at 1.8%.
Professional and business services saw the most job gains with 51,000, while health care added 35,000, transportation and warehousing contributed another 24,000, while construction added a further 21,000.
All good news, but it gets better. Jobs in the key manufacturing sector rose 17,000 last month, above the 8,000 per month average in 2019 and getting closer to the 22,000 increase a month in 2018. That was after five months of minimal gains, and when some fears that the factory jobs were drying up. But no, that is not the case and, furthermore, these latest figures give real hope on the sustainability front too.
Outgoing US President Barack Obama announced during the 2016 Presidential campaign that a “magic wand” was needed to reverse the manufacturing sector’s decline across America. Well, it looks like the present incumbent President Trump has found that wand, and he is waving it as the US has seen more than half a million manufacturing jobs created since the 45th President took office.
As an aside, watching the pack of 2020 Democrats making their case on the recent televised debates there are worrying signs they don’t get what’s happening to the US economy. Not least because they are all saying they want to reverse Trump’s fiscal and economic policies in order to help American workers. Really?
Maybe things will clarify a little for the Democrats closer to polling day. Especially so when there are noticeably less contenders, I mean the current 2020 Democrat presidential field has more runners than the Boston Marathon. So we’ll wait and see as things thin out on that front, and the noises that follow.
Now, okay, unemployment still rose slightly during this period to a national rate 3.7%, but compare that with the current unemployment rate in the European Union: 7.3%. But with the US rate of job creation, it means that Americans looking for work have got some opportunities. Interestingly, it may mean more opportunities for the people who need it most. Employers may well look to job candidates with less education or fewer skills with any training deficit met with providing on-the-job training.
And this wealth creation seems to trickling through to all groups in society. Take African Americans: unemployment is now at a 50 year low. Effectively that group’s unemployment rate has halved to what it has been historically in decades past. Tellingly, the last President got nowhere near these types of figures.
The reaction from the markets to the latest job figures was mixed. Some see it as unsustainable. The Federal Reserve is openly cautious if not pessimistic about the latest job figures. Yet, the President feels that the economy still needs lower interest rates and if it gets them will go like a “rocket ship.” But then we know that the President feels that “the Fed” just doesn’t get what is happening. He has said: “We don’t have a Fed who knows what they’re doing.”
Time will tell on all this. However, Trump has been right so far – against all the experts – and who knows he may well be right in the future. The one thing about this presidency is its unpredictability- but that works both ways. So far, on the domestic economic front, the unpredictability has brought nothing but good news, sorry great news.
Looked at from across the Atlantic these figures look amazing but also inviting. Europe for political and structural reasons cannot match the overall growth rates seen in the US – the South East of England is very different from Bulgaria say. Whereas the US has a political structure: Federal and State, which allows for an overall boast across the country and for all its citizens. That’s not to say there are not pockets of even greater success in America.
Take Texas, for example, the State’s unemployment rate is even lower than the national one – 3.5% compared to 3.7%. Drilling that down to Austin, the state capital and you find the rate is at an incredible 2.2%. The largest job creation in any US county was in Midland, Texas, with a 10% growth recorded. Within Midland, the largest employment increase occurred in natural resources and mining, which gained 5,305 jobs over the year – a whopping 20.3%.
Jobs means business, business means money flowing around the economy, this creates new business, and so on…
The news continues to be good from the States. It’s never been a better time to work and do business there. It’s never been a better time to pick up the phone and make your US business dream come true. So what are you waiting for Mount Bonnell Advisors can help that dream become a reality. We have done it for others; we can do it for you.
