WASHINGTON — President Trump is expected to use his State of the Union address on Tuesday to bask in what he calls the “blue-collar boom” underway across the country. In doing so, he will be playing to his strongest area with voters as he seeks re-election, but also overstating the strength of an economy that has slowed or stalled on several key measures.
Under Mr. Trump, the current economic expansion has reached its 11th year, a record for the modern era of economic statistics in the United States. Unemployment sank to 3.5 percent in December, down from 4.7 percent when he took office. Workers’ wages are growing, particularly for those in the jobs that pay the least, like retail clerks and restaurant workers. The stock market, which is one of the president’s favorite gauges of economic success, is up about 20 percent from a year ago.
Forty percent of Americans say they are now better off financially than they were at the same time last year — double the number who say they are worse off, according to a survey conducted last month for The New York Times by the online research firm SurveyMonkey. That is the brightest economic outlook respondents have expressed in the three years the survey has been conducted. Independent voters, a particularly crucial electoral bloc, reported a surge in confidence in the latest survey.
And yet, the economy’s improvement has slowed on several fronts since last year, particularly in the president’s favored blue-collar sectors like mining and manufacturing.
Mr. Trump declared in his 2019 State of the Union speech that “an economic miracle is taking place in the United States, and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations.”
Over the last year, the president’s economic policies have not delivered anything close to the miracle that he has promised to white working-class voters in the industrial Midwest. Combined employment in construction, manufacturing and mining grew more slowly last year than at almost any other point in the current expansion.
Job growth has slowed sharply — from 2.6 percent at the start of 2019 to 1.3 percent at the end of the year — in so-called middle-wage sectors that include mining, construction and transportation, according to calculations by Nick Bunker, an economist at the Indeed Hiring Lab. That blue-collar slowdown is driving the deceleration of job growth across the United States economy.
Mr. Trump’s policies have not revived employment in coal mining, as he promised; the sector lost 1,000 jobs nationwide in 2019, according to the Labor Department. Primary metals manufacturing, which includes the steel and aluminum industries that Mr. Trump claimed to have restored with tariffs, shed 12,000 jobs in 2019.
Employment growth in manufacturing, which Mr. Trump touted in his speech last year, slowed to fewer than 50,000 jobs in 2019 — the worst rate of his presidency and the second worst of the long recovery from recession.
Many economists blame that performance on the trade wars Mr. Trump has waged with China and other countries that send steel, aluminum, washing machines and solar panels to the United States.
Economic growth slowed to 2.3 percent last year, according to data released last month by the Commerce Department. That is a percentage point less than what Mr. Trump’s advisers predicted for the year. Across Mr. Trump’s three years in office, growth has never reached the 3 percent rate that administration forecasters have projected. It has fallen well short of Mr. Trump’s campaign promises of 4 percent, 5 percent or even 6 percent annual rates.
Independent economists expect only modest growth this year from the initial trade deal that Mr. Trump reached with China and the revamped North American trade pact that he signed last week.
The president and his advisers have indicated that they will look for additional ways to spur the economy should he win a second term. On Tuesday night, Mr. Trump is expected to propose additional tax cuts on top of the more than $1.5 trillion package he signed in 2017. The president’s aides have suggested that those cuts could be a combination of additional tax relief for the middle class and new breaks on capital gains that would primarily benefit high-income and wealthy Americans.
The desire to propose another tax cut so soon after the last one could stem in part from the fact that Mr. Trump’s plan has failed to produce the sustained investment boom that he and Republicans promised. After surging in 2018 after a cut in the corporate income tax rate, business investment shrank — which is to say, posted negative growth rates — for the final three quarters of 2019.
Investment has now grown more slowly in the quarters after the tax cut than it did in the eight years, including the end of the Great Recession, under President Barack Obama.
Mr. Trump and his economic team are unequivocal in saying that the president and his policies fundamentally transformed the economy.
“This is a different labor market,” Tomas Philipson, the chairman of Mr. Trump’s Council of Economic Advisers, said in an interview last month, citing accelerated wage growth for the lowest-paid workers in the country. “We’re growing faster in all categories.”
Other analysts say Mr. Trump has benefited from a historically anomalous combination of economic stimulus while unemployment is low. The Federal Reserve ended a slow march of interest rate increases last year and slashed rates instead, spurring growth and stock gains. Combined with defense and other federal spending increases that bipartisan majorities in Congress passed and Mr. Trump signed into law, the tax cuts have helped to swell the federal budget deficit to $1 trillion a year.
Fiscal hawks are already warning of more deficit-increasing possibilities in Mr. Trump’s plans. “Reports suggest the president may discuss new deficit-financed proposals, including another round of unpaid-for tax cuts,” said Michael Peterson, the chief executive of the Peter G. Peterson Foundation, a nonprofit group. “If our leaders care about the economy for the next generation, they should manage our debt and improve our fiscal outlook instead of making the problem worse.”
Any tax-cutting proposal from the president would be dead on arrival this year in the Democrat-controlled House, regardless of deficit implications.
It would, instead, be another economic promise for Mr. Trump to campaign on.