Is Trump next to use the unemployment rate as a reason to slow down the economy?

As the government shutdown and the broader economy crumbles, the stock market may be set for a big slide. But it’s the unemployment figures, not the trade wars, that could signal that the bull…

Is Trump next to use the unemployment rate as a reason to slow down the economy?

As the government shutdown and the broader economy crumbles, the stock market may be set for a big slide. But it’s the unemployment figures, not the trade wars, that could signal that the bull market could be losing its footing.

The Labor Department reported Friday that the jobless rate ticked up to 3.9 percent, from 3.8 percent. That has happened several times since the economic downturn — last month’s was the highest since 2012 — and economists say it could be a sign that job growth is slowing down, even though they expect the unemployment rate to continue falling. Over the past 12 months, the U.S. economy has added 2.7 million jobs, compared with 2.1 million in the previous 12 months.

If so, it wouldn’t be the first time a strong economy and a drop in unemployment seem to conjoin to a broader market sell-off. In March 2009, when the unemployment rate peaked at 10 percent, the Dow Jones Industrial Average plunged nearly 800 points in the first two hours of trading on the day, only to soar more than 150 points by the end of the day. But a seasonally adjusted unemployment rate of 3.8 percent is below the 5 percent that’s typically considered “full employment,” which means job growth could be slower if fewer workers are needed to supply the industry with workers.

The Wall Street Journal reported that if job growth slows down, the Federal Reserve could be forced to slow its rate-hiking process, which is also scheduled to end in March, but that this scenario is “purely theoretical.” Any further rate hikes from the Fed could cause ripples in the bond market, which is sensitive to higher yields.

Labor’s first estimate of its preliminary estimate of third-quarter nonfarm payrolls is scheduled for next week. But Mr. Trump may start to lose faith if the jobless rate increases even further. He mentioned Friday morning that his administration is looking into a third stimulus package because unemployment is already low and “things are going great,” even though the White House and the administration’s own economic team have repeatedly said “he’s wrong” about the economy. Unemployment is at its lowest level since 1960, and the growing ranks of hourly workers are making $15 an hour.

Economists worry that Mr. Trump and his administration could be hampering the economy through the way they are attacking the federal judiciary. The president’s full-throated criticism of the courts, along with his DOJ attorney’s attacks on Special Counsel Robert Mueller and his veiled threats to jail witnesses in the Russia investigation are hurting the broader economy, they say. “Until the Trump administration abandons that attitude, it’s going to have negative consequences,” said Sung Won Sohn, chief economist at SS Economics in California. “The White House can complain about the leaks from the investigation, but the United States’ credibility and the integrity of U.S. government has been seriously damaged.”

Read the full story on Wall Street Journal.

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