President Donald Trump touted the success of his trade and economic policies in remarks to reporters in the White House Rose Garden on Friday while praising the monthly jobs report numbers.
Trump singled out the steel industry as a "miracle," saying the sector was now "thriving" despite being "practically out of business when I came in to office as president."
However, recent industry data does not appear to back that claim. Shares in U.S. Steel have fallen by more than 60 percent since their high last year, and industry experts describe "a secular downtrend" that could eventually reach "a low in the single digits."
“I don’t think it's valid to say that it’s come roaring back. It hasn’t. It’s stopped falling," said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics. "Profitability has increased, but this hasn’t meant that tens of thousands of American steel workers suddenly have a job. Over the course of the Trump presidency, you’re looking at an increase of about 4,000 jobs. For an industry that has somewhere between 80,000 and 140,000 employees... it is positive, but at the great expense of other sectors.”
The monthly jobs report, prepared by the Bureau of Labor Statistics, did show gains in the healthcare sector, which added 50,000 jobs last month and 346,000 for the year. Manufacturing is also expanding, adding 32,000 jobs in December, the bulk of which — 19,000 jobs — was in durable goods production.
This growth, which included the addition of 7,000 jobs in the manufacturing of fabricated metal products and 4,000 jobs in computer and electronic product production, was cheered by Alliance for American Manufacturing president Scott Paul, who credited the Trump administration’s protectionist policies in a statement. “With 32,000 new jobs last month, tough action against trade cheats is helping create new jobs for American workers,” he said.
But bellwether American businesses from Apple to General Motors have blamed the Trump administration’s policies on trade for falling sales and lost jobs, and the Institute for Supply Management’s most recent manufacturing index, while still expansionary at 54.1 (figures of 50 and higher indicate expansion), fell by 5.2 points, the largest month-to-month drop since the financial crisis.
Economists warned that the manufacturing sector’s gains could be vulnerable if if the current trade negotiations with China fall apart, and tariffs on steel and aluminum are raised or trade sanctions are expanded to include a much broader array of Chinese goods — including many consumer goods.
“It may be disguised right now because we have such high employment levels,” said Nicholas Lardy, a senior fellow at Peterson Institute for International Economics, adding that workers and job-seekers could start feeling the effects of a trade war within a few quarters if input costs were to spike, or higher prices on retail goods prompted a slowdown in consumer spending.
This is critical because the currently robust level of consumer spending is key to the expansion of two other labor market sectors that expanded in December: retail and leisure and hospitality. ADP's payroll report found that leisure and hospitality businesses added 39,000 jobs; the BLS documented an increase of 41,000 new jobs at food service establishments like restaurants and bars. And despite retailers’ well-documented challenges shifting from brick-and-mortar to omnichannel shopping, the holiday shopping season was a boon. Stores — particularly general merchandise stores and car dealerships — added a total of 24,000 jobs last month, BLS data found.
“The problem with some of these is they can become self-fulfilling. If they extend for a long period of time, they can start to hurt soft sentiment survey data and eventually that spills into hard data,” said Darrell Cronk, president of the Wells Fargo Investment Institute.