The US economy Appears To Be Getting More Sluggish Than Expected

Since Trump won the US presidential election, the US economy has been upbeat with hopes of high economic growth; but the trend is slowing down. Trump came into power with the promise to make America great again, and his proposed trade policy changes resonated well with the business community across the US. However, going by the recently released economic data, these positive sentiments within the economy have not been translated into actual economic growth for the short period President Trump has been in the Oval Office. Analysts at Lionexo attribute much of this sluggish economic growth experienced in the first quarter of 2017 to uncertainty surrounding potential policy changes by the Trump administration that are still under review.

Lower Job Creation Numbers

According to the March jobs report, the US added only 98,000 new jobs to the nonfarm payrolls. This is considered a very poor performance, considering most analysts had predicted 180,000 new jobs for March. The 98,000 new jobs created in March were a far cry from the revised number for February of 219,000. The March jobs report was not all bad though, with statistics showing that unemployment rate in the US plunged to 4.5 percent, the lowest level since the 2007/2008 global financial crisis. Nevertheless, the labor force participation rate which for the past recent months has been rising remained flat at 63 percent.

Falling Retail Sales In March

March retail sales fell a seasonally adjusted 0.2 percent according to the data released by the Commerce Department on April 14. This fall came after another fall in February where retail sales had a revised seasonally adjusted drop of 0.3 percent. However, retail sales in the past 12 months have risen by about 5.2 percent, which is a positive sign that the economy is still holding on a good footing.

The Trump effect has yet to boost consumer confidence enough to start spending, despite unemployment levels dropping in March and wages rising by about 0.2 percent in March as compared to February. Ian Shepherdson, an economist at Pantheon Macroeconomics cautioned that the retail sales figures are "impossible to square with the stratospheric levels of consumer confidence."

Since the year began there has been a consistent drop in purchases at auto dealers and restaurants and bars, two of the major sources of sales growth in the previous years. At the auto dealers, sales fell by about 1.5 percent in March while at restaurants and bars a drop of 0.6 percent was recorded. On top of this, sales were lower at building materials stores and gasoline stations, though gas station spending could be attributed to lower energy prices. 

Drop In Homebuilding Statistics

According to a report released by the Commerce Department on April 18, housing starts decreased by about 6.8 percent in March to a seasonally adjusted annual rate of 1.22 million units. This is compared to the revised February starts that stood at about 1.30 million units from the previously reported 1.29 million units. Economists had projected the housing starts to fall to about 1.25 million units in March but the outcome just like in job creation, was worse than the forecasted drop.

Single family starts from the Midwest recorded the biggest decline, falling by about 35 percent which was the largest drop since January 2014. and their lowest level since August 2015. In the Northeast, single family starts remained unchanged; in the West it fell by about 5.5 percent and rose by about 3.2 percent in the South. Starts for the multi-family housing also were on a downward trend dropping by about 7.9 percent in March to a 394,000 unit pace. On a positive note however, building permits generally increased by about 3.6 percent in the month of March.

Although consumer confidence remains high within the US, the economic indicators are telling a different narrative. This could be attributed to the uncertainty surrounding the Trump presidency, with consumers waiting for an actual economic transformation agenda to be implemented before they can start increasing their expenditure.