OK, it’s early days. But more than four months after Donald Trump’s inauguration as US President, and 10 weeks after his preliminary budget blueprint, indicators suggest poor economic management and evaporating confidence. This is seen in current figures relative to recent US history. It becomes even more stark when we compare the US with other developed economies.
The economy grew at an annualised rate of 0.7% in the first quarter of 2017. That is the lowest quarterly rate of increase in gross domestic product in three years. The USA is now the only economy among the 35 developed countries comprising the Organisation for Economic Co-operation and Development (OECD) to have its GDP growth rate at a three-year low. With the global surge in trade and profits well underway, many countries now are at, or close to, their highest level in three years. These include Austria, Belgium, Portugal, Australia, Finland, Slovenia, the Czech Republic, Hungary, Latvia, Estonia, Turkey, Germany and Spain.
A steady rise in expenditure by individuals and families came to a grinding halt in the first quarter of 2017. This bodes ominously for retailers at first blush, but then also for wholesalers, manufacturers, importers, transport and others down the chain.
The increase in consumption was just 0.76% for Q1 2017, one of the lowest quarterly increases since the depths of the global financial crisis in 2009.
Of concern to some tens of millions of Trump supporters in the manufacturing belt, spending on motor vehicles fell 13.9%, the worst quarterly decline since 2011. Spending on all durable goods fell 1.4%, a decline last exceeded in 2011.
Consumer spending increased in the 2017 first quarter in 29 of the other OECD countries, and fell in just five.
US job numbers and job participation have followed impressive trajectories for the last several years. The unemployment rate in April was 4.4% and the participation rate 62.9%. There has been no significant shift in hours worked per person for 13 months.
These are lagging indicators, however, so the impact of decisions taken — or the economic mood set — in early 2017 will take several quarters to register.
With the US leader claiming to be a successful entrepreneur, few citizens so far have been inspired to follow Trump’s example. Non-farm self-employment declined from 8,991,000 in December 2016 to 8,826,000 in February this year. It fell further in March and April and is now a lowly 8,489,000. That is well down on the 8,860,000 in April last year.
New home sales
Sales of new single-family houses collapsed 11.4 % in April to a seasonally adjusted annual rate of 569,000. That’s down from the average for the first three months of 2017 of 616,000 and down from 566,000 in April last year.
Two indicators of how countries are travelling as global citizens are trade and tourism. Both have dived since Trump’s inauguration.
The average trade deficit for the three months January to March was negative $45,213 million. The last time it was this low was in early 2012, towards the end of the GFC.
Having the worst trade deficit in three years is another distinction the US now has alone in the OECD. Those currently at or close to record highs include Australia, Ireland, the Netherlands, South Korea, the Czech Republic, Japan, Denmark and Germany.
Tourism to the USA has been strong since the GFC ended in 2013 with total number of arrivals exceeded only by France. Total passenger fare receipts have fluctuated between $39 billion and $44 billion for the last five years. The trend since January, however, has been all down-hill. Fare receipts have been just $10 billion for the first quarter, the lowest first-quarter level in four years.
Value of the US dollar
Shortly before Trump’s inauguration in January, the US dollar bought 96 euro cents. It is now down to 89.4, a decline of 6.8% in four months. It has declined 7.1% in value relative to the UK pound and 4% relative to the Japanese yen.
One of the few bright spots is the stock exchange where optimism — perhaps for the long term — is still strong. The Dow Jones hit an all-time high of 21,115 in March and remains buoyant at 21,080.
Too soon to tell
Government spending hit an all-time high in the 2017 first quarter of $6338.7 billion. Federal government debt is currently $19,846 billion, holding steady over the last 10 weeks, just below the all-time peak of $19,977 billion in late December.
It will be intriguing to follow these and the other longer term indicators in months to come.
Right now, however, it is fair to say Trump is not making America great again. Regarding the economy, he appears to be achieving the opposite.