Is the US economy holding up under Trump?

Donald Trump "loves to hype strong data", says Ben White on Politico.com. So last week's poor first-quarter GDP figure would have been "a significant political blow" to mark his first 100 days in office. The annualised growth of 0.7% was the economy's worst performance since the first three months of 2014. What was that about "making America great again"?

Take the figures with a dollop of salt, says Justin Lahart in The Wall Street Journal. For years now, the first quarter has been weak, largely because of statisticians' problems adjusting the GDP figures for seasonal swings. The figures have always been stronger over the rest of the year. Nonetheless, adds Lahart, it is worrying to note that according to the preliminary figures at least the main problem in the first quarter was the weakest growth in consumption since 2009. Household spending is worth 70% of GDP.

This plays into a key US market theme of recent weeks the gulf between soft data, or surveys, and hard data, ie, official statistics. For instance, retail sales have been weak, yet consumer confidence has climbed to a 16-year high. But the upshot is that these worries look overdone. William Hobbs of Barclays notes that there is no reason to suppose that the surveys' ability to foreshadow the hard data has deteriorated. A chart of the US ISM manufacturing survey (advanced by two quarters) and US GDP shows that these two data points have been in virtual lockstep since 2003.

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And the latest hard statistics point to improvement in any case. Last Friday's payrolls saw the unemployment rate slip to a new ten-year low of 4.4%. April saw 211,000 new jobs being created. "March's weak number seems to have been a weather-related blip," says Alistair Osborne in The Times. There is also "growing evidence that wage pressures may be building". A further interest-rate rise by the US Federal Reserve "is firmly on the cards for next month". The Fed itself certainly seems confident in the economy. It said last week that the "fundamentals underpinning the continued growth of consumption remained solid".

This is just as well, since Trump's tax cuts and spending plans, which were supposed to "usher in a new era of growth and jobs, still look miles away from reality", as Osborne says. But this also means that the odds of the economy overheating, triggering unexpectedly sharp rate hikes that could cause the overpriced market to fall sharply, may have receded. The long post-crisis rally could have even further to go.