Jobs are out there.
The U.S. economy created 227,000 new jobs in January, as more workers were coaxed back into the workforce at the start of 2017. The increase in the size of the workforce helped push the unemployment rate slightly higher, to 4.8 percent, up from 4.7 percent in December.
Where’s the momentum coming from? Housing. Construction companies added 36,000 people during the month, with some 9,000 in residential construction. That’s the biggest monthly add for homebuilders in a couple years. Also, financial activities — which includes real estate agents and banks and mortgage brokers who make home-buying happen — added 32,000 during the month.
The report underscores a fact that the Trump administration — which has been intensely focused on U.S. manufacturing jobs — will have to face.
While hugely important to his political base — including industrial Midwestern states like Michigan and Ohio — manufacturing just isn’t a big part of a U.S. economy that has been intensely tilted toward domestic consumption for decades. In fact, today’s jobs report shows that manufacturing jobs shrunk to just 8.48 percent of all U.S. jobs, a new low.
Any effort to reorient the U.S. economy radically toward manufacturing would be disruptive and incredibly difficult. If Trump is serious about hitting his goals of pushing U.S. growth up to 4 percent, expect him to focus on pulling more conventional levers for economic growth, such as easing regulations that have kept bank lending relatively tight. For the record, the Trump administration seems to be setting the table for just such a relaxation of regulations on the banks, with news emerging Friday that he plans to kill off an Obama-era rule that attempted to reduce conflicts of interest for asset managers and brokers.
While reckless lending can get out of control, a burst of lending is a much easier path to U.S. economic growth than trying to turn the U.S. economy back to some industrial Golden Age.