A quick scan of the news on any given day, if you can get past the impeachment rumpus, might lead you to believe the U.S. economy is in a death spiral or dangling at cliff’s edge. Fearful, handwringing headlines abound over the recession at our doorstep. Is a recession inevitable? Well, yes, in the same way Benjamin Franklin cheekily divined that the only certain things in this world are death and taxes … and apparently recessions. Yes, a recession (and your mortal demise) is going to happen someday, just not necessarily today.
Recessions are a predictable part of the economic cycle. As the United States enjoys the longest economic expansion in recorded history, we are breaking new ground every day. But who is to say we can’t keep a good thing going for a while longer? Let’s look at the facts.
Nearly all major sectors of the U.S. economy are growing with the notable exception of manufacturing, which is down but not by much. Output has decreased less than a single percentage point over last year (compared to a nearly 20% drop in the last recession) and actual factory shipments are down less than half of one percent. Significantly, manufacturing accounts for less than 10% of overall U.S. employment. In the past, a drop in manufacturing production led to millions of layoffs and a nosedive into recession, but this is not your father’s economy. Today, the nation’s economic makeup is much more diverse and resilient.
Rather than losing millions of jobs, the U.S. economy is creating them each year. Consumption related directly to those jobs and their wages drive an estimated 70% of economic growth. What really matters in today’s economy is consumer confidence and spending. When people have jobs and money, the U.S. economy grows. The good news is that people living in the U.S. have both. Unemployment nationwide is at the lowest levels in more than 50 years at 3.6%, and at historically low levels for women and minorities. And these jobs are paying more as wages have risen at least 3% over the past 15 months.
In addition to a dip in manufacturing output, trade wars are creating economic headwinds. Farmers and factories are bearing the economic brunt of Trump’s hardline tactics to combat China’s unfair trade practices. The stock market rises and falls at every hint of the latest negotiations. Both sides have economic and political incentive to get a deal done or at least call a truce. While the trade war may be constraining economic growth, reaching resolution will certainly propel the stock market and the overall economy even further.
That is good news for the economy in the U.S. It is even better news for the economy in Utah. Job growth in the U.S. is good. In Utah it’s even better. The unemployment rate in the U.S. is at historic lows. In Utah it’s even lower. Overall economic growth in the U.S. is strong. In Utah it’s even stronger.
While growth has eased somewhat over the past months, those ebbs and flows are to be expected and are certainly not as dire as headlines would lead you to believe. Yes, someday we will enter another recession, but for now let’s be thankful for what we have and reject the economic hypochondria that would lead to an early grave.
Derek Miller is the president and CEO of the Salt Lake Chamber.