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Trump’s Physical Economy Improved But Was Still Sick before Storms

Sept. 5, 2017 (EIRNS)—Before being struck by powerful tropical storms, the physical economy of the United States had shown improvement in both business capital investment and goods-producing employment since the election of President Donald Trump. But it was still shrunk, like the labor force, relative to a decade ago when Barack Obama took office.

The August 2017 U.S. Labor Department jobs report showed an unexpectedly low "adjusted" figure of about 150,000 employment growth, made still lower by 40,000 in downward revisions of previous months. Year-to-year job growth remains at about 2.1 million; as of last August it was 2.4 million; as of August 2015 it was 2.7 million. The six-month running average of job creation has dropped to 160,000/month. Hourly wages stagnated in August, and average weekly wages fell by 2.2% from July. Weekly wages are up just 2.5% (before inflation) from a year earlier.

During Trump’s Presidency so far there has been turnaround growth of the major categories of goods-producing employment: construction and manufacturing by about 100,000 each, while mining has stopped falling. There has also been distinct growth, after long stagnation, in business capital spending—related to the assumption that business taxes will be lowered—and a temporary acceleration of GDP growth. The August report claimed total "goods-producing employment" growth of 70,000, despite the low overall jobs growth in the month.

However, compared to August 2008, a full decade ago, there are 300,000 fewer construction workers, 60,000 fewer mining and oil industry workers; and 900,000 fewer manufacturing workers. The labor force has grown by 5.5 million during that decade, making this productive employment shrinkage even more drastic. And the eligible population not in the workforce has leaped up by a shocking 15.8 million, three times the labor force increase.

Public construction (Federal and municipal infrastructure of any type or value) remains at zero growth for the year.

Two very major industries were showing slowdowns before the hurricanes hit. Housing starts have dropped more than 10% during July and August; auto sales have dropped to about a 16.1 million annual rate from 17.4 million (which was quite high).