America’s slowing economy could become an election issue

America’s slowing economy could become an election issue

FINANCIAL MARKETS have seen several episodes of panic since early 2018, often triggered by developments in President Donald Trump’s trade war with China. And in recent months, indicators of economic activity in America have begun to lose momentum. The worst figures are in manufacturing. Growth in the sector almost halted over the summer. Industrial production declined in July, according to the Federal Reserve, and in September the ISM-Chicago Business Survey, another closely watched indicator, hit its lowest level since 2009. Jobs figures published on October 4th showed a decline of 2,000 jobs in manufacturing between August and September. In parts of America’s industrial heartland, including midwestern states such as Indiana and Michigan, which helped carry Mr Trump to victory in 2016, the hiring slump has been pronounced. Get our daily newsletter Industry is a politically resonant sector. But more than 90% of Americans work in other parts of the economy, in particular services. What happens next depends on whether the weakness in manufacturing spreads. So far it has not. Private employers added a net 358,000 jobs in the third quarter, down from 527,000 during the same period a year earlier, but still well in positive territory. The unemployment rate, meanwhile, fell to 3.5%, the lowest since December 1969. Consumer spending is the engine of American growth, and petrol aplenty remains in the tank. Personal consumption grew at an annualised rate of 4.6% in the second quarter of 2019, more than compensating for declining investment and exports. Household debt remains […]

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