The latest unemployment numbers were so positive that President Donald Trump took the unprecedented step of celebrating them with a tweet before the official statistics were released.
A net increase of 223,000 jobs in May pushed unemployment down to 3.8 percent, the best showing since the dot.com boom of the early 2000s and the 92nd consecutive positive month.
Iowa unemployment was 2.8 percent in April with the May report pending.
But structural problems only have marginally abated, like the lack of wage growth — 2.7 percent more than a year ago or 8 cents per hour. Some economists believe the biggest upticks are among “job jumpers” in tight, growth industries, while “job stayers” are lagging.
The Federal Reserve’s “2017 Report on the Economic Well-Being of U.S. Households” released in May found the share of Americans living “comfortably” or “OK” has risen 10 percent in the past five years. However, 40 percent of respondents had insufficient savings to handle a $400 emergency expense — down from nearly 50 percent five years ago — and 22 percent can’t pay their bills every month.
A 2017 United Way survey found 43 percent of households didn’t make enough to cover the combined costs of housing, food, child care, health care, transportation and a cellphone. In Iowa, it was 31 percent of all households (381,266).
The Trump administration is gambling that aggressive actions on trade issues will revive moribund manufacturing industries and resurrect formerly good-paying jobs.
Last week it imposed 25 percent tariffs on steel and aluminum on previously exempt allies such as Canada, Mexico and the European Union, prompting retaliatory tariffs. Earlier, it negotiated voluntary export limits with South Korea, Argentina, Australia and Brazil, while Japan balked.
The president has rightfully called China “the bad guy” on trade. According to the U.S. Department of Commerce, worldwide steel production exceeds customer demand by 700 million tons — seven times U.S. output — largely due to China dumping its state-subsidized excess capacity on world markets.
But China accounted for only $2.9 billion (2 percent) of U.S. steel and aluminum imports or 2 percent, down 75 percent since 2014.
Imports from Canada amounted to $12.4 billion; the European Union, $7.7 billion; and Mexico, $2.9 billion.
The administration now has imposed more economic sanctions on allies than China, while putting the future of the North American Free Trade Agreement in doubt.
It’s a strange strategy when a united front is needed against China as it seeks to make greater inroads along the historic Silk Road into Europe and northern Africa with its ambitious $1 trillion Belt and Road Initiative to modernize infrastructure for its trading partners.
The steel industry, which has added jobs, is overjoyed by the tariffs, while the Aluminum Association is bewildered. “(The) action does little to address the China challenge while potentially alienating allies” and disrupting supplies of aluminum and raw materials that U.S. producers need, stated Heidi Brock, its president and chief executive.
The nonpartisan Trade Partnership claims the tariffs will cost five jobs for every position saved in the metal-producing industries.
As The Courier reported in March, Cedar Valley metal fabrication shops have been nervous about the ramifications of rising steel and aluminum prices, which had risen precipitously by mid-March as Trump talked tariffs.
Tom Donohue, president and chief executive of the U.S. Chamber of Commerce, sent a memo predicting 2.6 million jobs lost due to Trump’s trade policies — NAFTA withdrawal, 1.8 million; China tariffs, 134,000; steel and aluminum tariffs, 470,000; and tariffs on auto and auto parts, 157,000.
Iowa is “at risk” of losing 138,000 jobs related to trade with Canada and Mexico, according to the chamber.
The EU plans to impose import taxes on bourbon, Harley Davidson motorcycles, cigarettes, denim, peanut butter and cranberry juice — primarily targeting Republican states.
Canada will impose a surtax of $12.8 billion on various U.S. goods, politely excluding most agricultural products.
Mexico will levy import taxes on U.S. pork bellies, apples, cranberries, grapes, some cheeses and various types of steel. It previously threatened a corn boycott.
Last year Mexico bought $2.5 billion worth of corn, primarily from Midwest states, but is now looking at Brazil and Canada as more dependable trading partners.
Pork and soybeans are reportedly in China’s crosshairs.
Iowa is the leading pork-producing and pork-exporting state and second in soybeans. Mexico was the leading U.S. pork purchaser last year, followed by China, which was top in soybeans. In April, China canceled nearly 200,000 metric tons of U.S. soybean purchases, according to Chad Hart, an Iowa State University economist.
While the U.S. job situation continues to improve, Trump’s trade gambles make the long-term outlook somewhat precarious. It is a strange strategy to attack China’s misbehavior on trade by alienating allies and putting vulnerable sectors of the U.S. economy at risk.