The Economy in Review: March 2018
As the first quarter of 2018 draws to a close, America’s streak of growth carries on. While there are certainly plenty of positive things to be said about the current state of the American economy, some economic commentators aren’t terribly excited. GDP growth has a history of being slow in the first quarter of a year before rebounding as the year progresses. Let’s take a look back at some of the recent news and events that offer a larger look at what’s going on right now.
Is a Trade War in the Future?
By far, one of the most hotly debated economic stories of March 2018 was the tariffs on imported steel and aluminum announced by President Trump. News of the steep tariffs resulted in Chief Economic Advisor Gary Cohn resigning from his position and sent the stock market down as investors worried about the risk of retaliation. Many are concerned about the risk of a trade war, despite Trump’s assertion that “trade wars are good, and easy to win.” The European Union announced they were considering duties on goods imported from the United States, which would be valued at about $3.5 billion, while China vowed to open its markets to foreign trade in response. Several U.S. retailers also spoke out against the tariffs, asking Trump to consider the impact they would have on consumer prices and American families.
Consumer Confidence Reached a High
In early March, the University of Michigan’s Survey of Consumers found that consumer confidence had reached its highest level since 2004. All of these gains were driven by the confidence of households in the bottom third of incomes. Consumer confidence levels among those in the upper third of incomes, on the other hand, took a drop. Among households in the top third of incomes, income expectations fell and inflation expectations rose.
What Could Stop Our Recovery?
March 2018 marked the ten-year anniversary of some of the early events of the Great Recession. But in April, our recovery from the Great Recession will become the second-longest American economic expansion on record and if it continues into 2019, it will become the longest one on record. There are no immediate signs that the recovery will end anytime soon, but Ben Casselman of the New York Times took a look at some of the things that could stop this growth.
The State of Employment
Throughout March, data about the American job market for February was released and the numbers reflect a very strong workforce. For the 158th consecutive week, weekly jobless claims were below 300,000. The last time we had such a long stretch of low jobless claim numbers was in 1970. Our current unemployment rates are at about 4.1%, which is a 17-year low and a level that Federal Reserve officials consider to be near or slightly beyond full employment.
According to the February 2018 Employment Report by Comerica, the average workweek in America increased by one-tenth to 34.5 hours, while average hourly earnings were up 0.1% after rising 0.3 in January, which are factors Comerica believes are a positive sign for 2018 GDP growth.
Millennial Home Buyers
After home sales reached a 10-year high at the end of 2017, Freddie Mac released a study about one segment of the population that hasn’t been driving that growth: young adults. Freddie Mac’s report focused what’s keeping them out of the housing market and how they compare to young adults in the year 2000. There are 45 million adults aged 25 to 34 in the United States and while there have been some gains in first-time Millennial home buyers, they found that headship rates for young adults in 2016 was down 3.6% compared to young adults in 2000. Had young adults continued buying homes at the same rate they had been in 2000, there would now be an additional 1.6 million households in the U.S.
