President Donald Trump has been counting on a strong economy to carry him across the finish line in 2020, but there are fresh signs the economy is significantly slowing down — and risks of a recession are rising.
In the last week alone, four significant indicators have flashed fresh warning signs about the state of the economy heading into an election year in which Trump will be leaning heavily on economic performance and job growth to maintain his hold on power.
1.) Job openings fell to their lowest level in the past 18 months. As MarketWatch reported on Wednesday, the total number of job openings in August fell “for the third month in a row and hit a one-and-a-half-year low, coinciding with a decline in hiring that’s taken place against the backdrop of a slowing U.S. economy.”
While there are still more job openings than unemployed Americans for the time being, job openings overall have dropped by 8 percent since the start of the year.
2.) American manufacturing has contracted for the first time in years.
Institute of Supply Management’s manufacturing index, which is seen as the gold standard for the measurement of the manufacturing economy, slipped in September to just 47.8, which is the lowest it has been since the height of the Great Recession in 2009.
What’s more, ISM says the president’s trade war with China is mostly to blame for the decline.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” Timothy Fiore, chair of the ISM’s manufacturing business survey committee, said last week.
Given how much emphasis Trump has placed on bringing manufacturing jobs back to the United States, he’ll have a tough time touting his policies as a success if the manufacturing sector is in recession.
3.) The American services industry is also slowing down.
The services industry provides the most jobs for Americans — and ISM has found that it is slowing down as well. The index for non-manufacturing industries in ISM’s latest report fell to 52.6 in September, which is down from 56.4 in August.
Although that number indicates that the services sector is still growing, its growth has essentially slowed to a crawl.
“The weakness in manufacturing has now infected the services side of the U.S. economy, which makes up about 80% of it,” Peter Boockvar, chief investment officer with Bleakley Advisory Group, told clients last week, per CBS News.
4.) All of these factors have now led economists surveyed by the National Association for Business Economics to raise the risk of an imminent recession.
According to the association’s latest survey, roughly 80 percent of economists now believe there is real risk of the economy slowing down even further, up from 60 percent who said the same thing this past June. They also project that GDP growth in 2020 will be just 1.8 percent.
National Association for Business Economics survey chairman Gregory Daco, who is also the chief U.S. economist at Oxford Economics, told CNBC earlier this week that “the rise in protectionism, pervasive trade policy uncertainty, and slower global growth are considered key downside risks to U.S. economic activity.”