Despite solid jobs report, trade tensions, slowing global growth could weigh on U.S. economy
While Friday's solid jobs report bodes well for U.S. President Donald Trump's 2020 re-election prospects, persistent trade tensions and slowing global growth could weigh on the U.S. economy and job growth in the months ahead, experts said.
Friday's jobs report from the U.S. Bureau of Labor Statistics showed that hiring surged in November, causing the economy to add an unexpected 266,000 jobs, and pushing unemployment to a 50-year low.
Unemployment dropped slightly to 3.5 percent, and average hourly earnings climbed 3.1 percent over the past year to 28.29 U.S. dollars per hour.
U.S. markets shot up on the news, with the Dow Jones Industrial Average rocketing upwards over 300 points by day's end, at a time when the index is already sitting on historical highs.
Experts said Trump will need positive jobs results for the next few months to clinch the elections.
Historically, Americans have been concerned with the economy over all other issues, and it is that issue that is likely to win or lose the election for Trump, experts said.
"On that basis, if we keep getting such strong job numbers, Trump will have a huge headwind going into the 2020 election," Desmond Lachman, a resident fellow at the American Enterprise Institute, told Xinhua.
But at the same time, no one has a crystal ball that can predict whether the trend will continue, and the global slowdown is a concern for some economists.
"The problem for Trump is that it is far from clear that those strong U.S. job numbers will hold up over the 11 months remaining before the election, since storm clouds seem to be gathering over the global economy," Lachman said.
"As the IMF (International Monetary Fund) has correctly noted, we now have a situation where 90 percent of the world's economies are experiencing economic slowdowns," he said.
Meanwhile, protracted trade tensions between the United States and its major trading partners also posed downside risks to the U.S. economy.
Trump announced on Monday that he will "restore" tariffs on steel and aluminum imported from Brazil and Argentina, drawing wide concern domestically and abroad.
U.S. Trade Representative Robert Lighthizer on Monday also proposed additional tariffs of up to 100 percent on 2.4 billion dollars worth of French products in retaliation for French digital service tax, a move could further escalate trade tensions with the European Union.
If Washington insists on escalating the trade war with its trading partners, "he could bring on a global economic recession that would sour the U.S. economic outlook," Lachman said.
"If he did that he could find that he will have thrown away a second term," he added.
Diane Swonk, chief economist at Grant Thornton, a major accounting firm, warned that the U.S. economy could plunge into recession in 2020 if the Trump administration further escalates trade wars.
"The administration's trade policies have left little room to maneuver. Either the president backs off his campaign promises, holds the line on tariffs and the economy slows. Or, he risks a recession by doubling down on trade wars and heightening uncertainty," Swonk wrote in an analysis released earlier this week.