Trade war and the jobs report

Randall Forsyth of Barron’s reports that President Trump’s trade policies might be influencing government employment numbers.

Hints of the possible impact of the trade wars were visible in the May employment data reported on Friday.

Nonfarm payrolls increased by 75,000 last month, more than 100,000 short of economists’ forecasts. After downward revisions of 75,000 for the preceding two months, the net gain was nil, as they say on the soccer pitch. …

… As for the jobs report, the data suggest that employers are holding back on hiring, perhaps owing to uncertainty engendered by the trade and tariff conflicts.

But other gauges of the labor market show no signs of layoffs, with new claims for unemployment insurance hovering at historic low levels. The jobless rate also remains at half-century lows, while wages continue to edge up, also positive signs. …

… The impacts of the trade war are lowering economic growth to 1% or so in the current quarter, writes Nancy Lazar, head of Cornerstone Macro. … “But it’s important to put this in perspective,” she continues. This would be the fourth slowdown in the current expansion, which marks its 10th anniversary this month and is on its way to becoming the longest in U.S. history. “But in all prior cases, growth bounced back as headwinds faded [and] financial conditions eased,” she adds.

This week should bring further signals about whether the private sector is indeed faltering, from the monthly report on smaller enterprises from the National Federation of Independent Business and the University of Michigan’s consumer confidence poll.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...

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