An overwhelming August work report raises fears of an economic downturn, increasing efforts for President Trump Donald John TrumpPompeo pressed for possible Senate run by Kansas media The Hill & # 39; s 12:30 Report : Trump digs into Hurricane Dorian projection Trump's mental decline is all set for those with eyes to see and ears to hear MORE re-election.
The United States added about 1
The resilient job market has been one of Trump's best-selling points as he seeks to win re-election because of the US economy. But the disappointing August job report threatens to undermine Trump's message ahead of a critical streak for the economy.
The report comes as the Trump administration and China try to revive trade talks after more than a year of tit-for-tat tariffs between the world's two largest economies.
Staff-level deputies will begin later this month with the hope that they will open the door to a meeting of higher-level officials sometime in October.
But with just 14 months until the 2020 election, Trump faces a narrow window to strike a ceasefire with China that could steer the United States away from the edge of a recession.
While trade experts have ruled out the chance of a comprehensive deal, the US and China could seek a smaller deal to ease tensions and tariffs.
Failure to do so may derail not only the US economy, but Trump's shot at another period in the White House.
"Today's employment data, combined with previous revisions to 2018, indicates that we have hit a tipping point," wrote Diane Swonk, chief economist at Grant Thornton, in a research note on Friday.
"It is likely in response to trade tensions and the weakness we see abroad."
Trump has remained defiant in the face of mounting pressure to end the trade war with China, negate the risk to the economy and talk about losing influence . The President has repeatedly warned Beijing not to wait to sign an agreement with its potential successor, insisting that the US economy is strong enough to weather a fight with China.
"China eats tariffs." Billions flow into US. Targeted patriot farmers getting massive dollars from incoming tariffs! Good job numbers, no inflation (Fed). China has the worst year in decades "Conversations happening, good for everyone!", Trump tweeted Friday.
President also took a shot at the media reporting on the economy.
"The economy is great. The only thing that adds" uncertainty "is Fake News!" Trump added just hours after the work report was released.
So far, consumers have largely been isolated from the direct effects of Trump's trade war, even as business expansion, industry and other trade-sensitive sectors faltered.
While the United States is facing greater chances of a recession, the country still has a strong labor market, steady consumer spending and solid wage growth. Around 571,000 people joined the workforce in August, pushing labor force participation higher and keeping unemployment steady at 3.7 percent.
"The stories in the newspaper have generated a psychology far worse than reality," National Economic Council Director Larry Kudlow Lawrence (Larry) Alan KudlowMORE told reporters in the White House on Friday . "The underlying strength of the economy is much better than people might think."
Although months of fading industrial production, tensions and poor economic data from abroad appear to be closing in on the labor market.
Growth has cooled down significantly from a violent 2018 as average monthly job gain has fallen from 234,000 last year to 158,000 in 2019. Economists say job growth has fallen to the 100,000 monthly average gain required to stave off a recession.
"The effect of the trade war … is now spreading to the real economy," wrote Joseph Brusuelas, chief economist at RSM, in a research note on Friday. "Friday's government report illustrates the unflattering form of things to come."
The next test for the US job market will come in October, when Trump is set to raise $ 250 billion in Chinese import tariffs to 30 percent from 25 percent. The president will also finish imposing a 15 percent duty on an additional $ 320 billion of transgender Chinese goods in December after spending taxes on about half of those items on September 1.
The Federal Reserve is expected to soften it with an interest rate cut when the bank's policy committee meets in Washington later this month. The independent central bank is likely to issue a moderate cut of 0.25 percentage points as a hedge against a potential decline, far less than the 1 percentage point cut Trump is seeking.
Trump has asked the Fed to cut interest rates in half from their 2 percent to 2.25 percent range, calling for a stimulus level last seen during the recession in 2008. The president renewed his attack on the Fed and his handpicked chairman, Jerome Powell, in a tweet that was posted shortly before the work report was published.
"They were too early to travel, and it was too late to cut – and a large dose of quantitative tightening didn't exactly help either," Trump tweeted. "Where did I find this guy Jerome? Well, you can't win them all!
Powell countered during a Friday speech in Switzerland that" the most likely outlook for the United States is still moderate growth, a strong job market, and inflation continues to rise. again, "brushing off requires a sharp cut.
But the chairman also acknowledged that the Fed could only do so much to protect the economy from trade policy. The ball is still in Trump's court. " Trade policy uncertainty causes some companies to hold back now on investment, "said Powell.