Economic Prospects

How about those numbers?  The United States added a whopping 298,000 new jobs in February beating conventional wisdom by more than 100,000.

According to the daily mail, the report from ADP, a global human resources and payroll firm, provides the first hard economic numbers from Donald Trump’s first full month as President.

Construction jobs increased by 66,000 in February and the manufacturing sector added 32,000.  ADP spokesman added, “February proved to be an incredibly strong month for employment with increases we have not seen in years.”

Jamie Dimon, chairman and CEO of J.P.Morgan Chase said President Trump’s economic agenda has ignited U.S. business and consumer confidence.  “It seems like he’s woken up the animal spirits,” Dimon said.  “Confidence has skyrocketed because it’s a growth agenda.”

Dimon said he’s reassured because of the caliber of people Trump has brought on to push the administration’s economic policies, including Gary Cohn, the former Goldman Sachs president who is now the director of the National Economic Council, according to Bloomberg television.

In an article by Jeffrey Bartash for Marketwatch, U.S. consumers are the most confident in the economy than in  15 years.  The survey of consumer confidence rose to 114.8 in February from 111.6 in January, according to the conference board.  That’s the highest level since July 2001.

Republicans and Independents are especially hopeful for the economy will get better.  The U.S. economy has grown in the last eight years, but the expansion has been the weakest in modern history.  The United States under the Obama administration has failed to achieve 3 percent annual growth for a record 11 straight years.  In December, the economy actually grew by 1.6 percent for the quarter.

President Trump has promised to cut taxes, reduce regulations and boost spending on infrastructure and public works, and people are responding accordingly.

Not all industry sectors are moving ahead.  The number of distressed U.S. retailers is at the highest level since the Great Recession of 2008-2009.

Retailers, according to Morning Star, are in the midst of a secular shift to online sales led by juggernaut Amazon.com.  And that is forcing many of them to spend heavily on their e-commerce operations.  At the same time, mall traffic has slowed dramatically as consumers buying patterns change, forcing retailers to discount heavily, hurting profit margins.

Another looming problem for retailers is debt.  The 19 issuers on Moody’s list have more than 3.7 billion of debt maturing in the next 5 years, with about 30 percent of that total coming due by the end of 2018.  The number is even higher when private credit is included.

From the risk of bankruptcy standpoint, the retail business is the new oil and gas industry.

Unfortunately, bank regulators can exasperate the problem as they so often have done in the real estate and oil and gas fields.

At the first sign of trouble, regulators will insist that banks cut their exposure within the industry.  This should be a time that banks with retail expertise should be working together to improve prospects and not abandoning their clients.

All this good news with the exceptions noted has added (since the election) $2 trillion of wealth to Americans’ household balance sheets.

U.S. household net worth now stands at $92.8 trillion according to the Wall Street Journal.  The stock market since President Trump’s election has climbed 14 percent.  Aren’t we glad Hillary lost?  Hopefully with the added wealth Americans will increase consumer spending and all economic sectors will benefit.