The official jobs report for July was expected to be solid, and it was a bit better than that. Net job growth was up 209,000 against a consensus expectation among economists of 180,000. The unemployment rate ticked down to 4.3 percent. Wage growth was 2.5 percent, not bad but still well below what you would expect from an economy running at full throttle.
The president, of course, immediately took credit for the good numbers. But what we are really seeing is the steady continuation of the economic conditions that prevailed before he was elected. As the Washington Post’s Ana Swanson points out, average monthly job growth this year has been 184,000, as compared to 187,000 in 2016. To a considerable extent, the U.S. economy continues to be immune to the chaos in Washington — or really, to any domestic political developments.
Perhaps the best news is that the job losses of the Great Recession have finally been wiped out (technically, that happened in 2014, but accounting for population growth, we’ve only now recovered to pre-recession employment levels).
The shadow in all this relatively bright economic news continues to be wage growth. And the tepid figures we’ve seen all year — and last year — will intensify the debate over the Fed’s apparent determination to continue a slow escalation of interest rates (the next hike will probably be in December) to combat phantom inflation.
As for the political fallout, there is little question that steady economic growth, if it continues, will give Trump a chance to stabilize his gradually eroding popularity, which wasn’t that strong to begin with. Midterm losses by his party, however mild, remain a virtual certainty, but an economic downturn could turn an adverse breeze into gale force winds pretty quickly.