The U.S. Department of Labor announced May’s employment report and it was not pretty. Expectations had been running for job growth in the 175,000 to 180,000 range. The reported number for May was 75,000 but combined with downward revisions for March (down 36,000) and April (down 39,000) the net change was 0.
The underlying economy is weaker than perceived when you look at transportation data and March quarter’s GDP numbers. If the economy continues on this path it could enter a recession when few are forecasting one, tariffs on Mexico and China could be major reasons for this to happen as you keep in mind the impact China’s retaliation has had on American soybean farmers.
Multiple indications that job growth under Trump is slowing
President Trump’s tax cuts went into effect in January 2018. When you analyze the numbers you see an increase in average monthly job growth through 2018 but that it is declining in 2019.
- February and May this year each had less than 100,000 jobs created.
- The only other month under 100,000 was September 2017’s 18,000 when hurricanes impacted employment.
- Besides April 2019’s trailing 3 month average job growth of 144,000, May’s 151,000 was the lowest since September 2017’s 136,000.
- Starting in January 2018, a year after Trump took office, the trailing 12 month average job growth was 173,000.
- It peaked at 223,000 in December 2018 after a full year of the tax cuts.
- It has fallen to 196,000 and hasn’t been this low since April 2018’s 192,000.
- After starting at yearly run-rate of 2.080 million in March 2017 (three months into the year to account for any large or small January and February results).
- It fell to 1.999 million in September 2017.
- It then climbed to a high of 2.822 million in June 2018 as the tax cuts were in full swing.
- And exited 2018 at a slightly lower rate of 2.679 million.
- It has now fallen to less than 2 million per year as of May, five months after the tax cuts were absorbed and trade wars are or could be in full swing.