Job numbers, stocks boost Trump in election year

President Trump is heading into the final year of his first term with a strong job market that could boost his chances of winning another four years in office.

The U.S. added jobs at a steady clip in 2019, powering through the rising costs of Trump’s trade battles, a global economic slump and myriad geopolitical crises.

Fears of a recession that dominated the summer have faded, and the stock market has shattered record highs through the first days of 2020 — with the Dow Jones rising above 29,000 for a time on Friday.

The December jobs report released the same day showed the U.S gaining 145,000 jobs and maintaining an unemployment rate of 3.5 percent, the lowest in more than 50 years. And some economists say the labor market has plenty of room to expand in the new decade.

“The economy is pretty damn good for the vast majority of Americans,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, a D.C. think tank.

“This year was good news. We could have a lot more good news.”

The resilience of the economy bodes well for Trump, who will be the first president ever impeached to run for reelection. He’s already arguing that electing a Democrat could cause the economy to turn south.

“And just in case you didn’t know it, Ohio just had the best year economically in the history of your state,” Trump said Thursday during a rally in Toledo, even though the state lost jobs in 2019. “That’s not bad. That’s not bad. And this year is going to be even better. Maybe much better.”

Few economists see significant risks to the economy.

The Federal Reserve is forecasting a pause on rate cuts after slashing rates three times during an anxious mid-year stretch for global markets. And while the economy is expected to slow, few see a significant dip or recession on the horizon.

Still, there are weak spots beneath the headline numbers that could make Trump vulnerable.

Trump’s promise to revive U.S. manufacturing and mining jobs was central to his appeal in Ohio, Michigan, Wisconsin and Pennsylvania — four industrial states that could make or break his reelection.

Hiring in those sectors surged in 2018 but fell flat last year amid the rising toll of Trump’s tariffs and the retaliation they drew from China and Europe. 

Manufacturing employment rose by just 46,000 workers in 2019 after rising by 264,000 in 2018. 

Employment in transportation and warehousing rose 57,000 last year, just one quarter of 2018’s gain of 216,000 jobs. And mining employment dropped 24,000 in 2019 after rising by 63,000 in 2018.

Economic downturns in Europe and Asia also cut into global demand for U.S. goods, driving a decline in hiring. The interest rate cuts issued by foreign central banks boosted the value of the U.S. dollar, making American goods less affordable in countries with limited buying power

The mix of trade blowback and global sluggishness stunted Trump’s mission to revive American production. U.S. manufacturing activity has been negative for every month since August and contracted in December to its lowest level since June 2009, according to the Institute for Supply Management’s Purchasing Managers Index (PMI).

“2019 was one of the weakest years we’ve seen for manufacturing jobs over the last decade,” said Scott Paul, president of the Alliance for American Manufacturing, a trade group representing manufacturers and the United Steelworkers.

Paul also cited a decline in U.S. auto sales as a drag on manufacturing overall, citing the industry’s wide supply network and hefty demand for steel as Trump’s tariffs push its prices higher.

“The pricing mechanisms that caused steel and aluminum to be in dire straits in the first place, weren’t fundamentally altered by the tariffs,” said Paul, who pointed to U.S. Steel’s recent closure of a Detroit plant that resulted in 1,500 layoffs.

Closures at steel plants, auto factories and other manufacturing hubs across the Midwest are red flags as Trump attempts to reassemble his winning industrial coalition. Even so, Republicans in key states for Trump’s success say the president will have little issue pitching his record. 

“His tone and tenor has made it a little harder in some of those more traditional Republican areas. But, I mean, I’ve got everything from pastors to plumbers telling me, ‘Okay, I maybe don’t like the tone, but you’ve got to look at the results,’” said Rep. Bill Huizenga (R-Mich.).

Sahm said declines in manufacturing employment are closely connected to pockets of industrial states that have lagged behind the country. She also pointed to the paltry increase in wages as proof that the labor force has ample room to expand in 2020.

Wages grew just 2.9 percent between December 2018 and 2019 despite unemployment remaining at or below 4 percent. While economists once assumed joblessness at that level would spur massive inflation, Sahm said an influx of workers from the sidelines could help tighten a booming labor market.

“These are the kind of workers that employers just hadn’t been willing to hire … if an employer is willing to hire them, they’re willing to work at a low wage,” Sahm said. 

“If employers can keep going and getting more people,” she added, “we’ve got more hours to give. And that means we’re not at full employment.”