As US factories falter, White House insists economy like 'a rock'

File photo: US President Donald Trump Photograph:( AFP )

AFP Washington, United States Oct 06, 2019, 11.45 AM (IST)

After a brief surge during his first years in office, and despite his lofty promises, the American manufacturing rebound has begun to crumble under President Donald Trump.

Auto plants and steel mills are shutting down. Companies are announcing layoffs and furloughs. Factory output is in the red.

The year-end outlook is grim, whipping up fears that as the global economy slows, Trump's trade wars with China and Europe -- with tariffs on hundreds of billions of dollars of goods -- could push the world's largest economy over the edge and into recession.

Most worrisome for the president, as he prepares to fight for a second term next year, the picture is darkest in regions of the country that gave him his paper-thin margin of victory in 2016, despite losing the popular vote nationwide.

The White House, for its part, is having none of this talk.

Throughout September -- as job creation slowed, key indicators fell, consumer confidence waned and factories spun down -- Trump attacked Democrats and the Federal Reserve, anything but his trade policy, while accusing the news media of "begging" for a recession.

"The PMI manufacturers' index has gone substantially up," Trump said during a September 25 news conference. 

"Our country is the strongest it's ever been economically."

Not so. In fact, the most closely watched gauge of American factories' health -- the Institute for Supply Management's manufacturing index -- had just fallen into the red in August for the first time in three years. 

And a week after Trump spoke, it fell to the lowest level since the Great Recession.

Tim Fiore, chair of the ISM manufacturing survey, told AFP the dropoff this year was the steepest in this century.

"It's like a nosedive," he said, warning that recession risks were mounting. "I think if we stay below 50 for a couple more months, it's not going to feel very good."

Pain in Mercer County, PA

As of August, Wisconsin, Pennsylvania, North Carolina and Michigan had fewer people working in manufacturing than they did at the end of 2018, according to Labor Department data. 

Trump's 2016 margin of victory in Pennsylvania, Wisconsin and Michigan -- crucial battleground states -- was fewer than 78,000 votes out of nearly 14 million cast.

But in an irate television appearance, Trump's senior trade advisor Peter Navarro accused the news media of "singing some song" about a weakening economy.

"This Trump economy is strong as a rock. Manufacturing is strong as a rock," he said in a tirade on CNBC.

He said highlighting Pennsylvania's job losses was merely "cherry-picking the data."

But there are quite a few cherries to pick.

Louisiana's Democratic Governor John Bel Edwards on September 30 blamed Trump's trade wars for the bankruptcy of Bayou Steel, which put nearly 400 people out of work.

In Michigan's Oceana County, where Republican support surged in the 2016 elections, a steel foundry operated by train manufacturer Wabtec announced last month it would close by the end of the year and lay off 61 workers due to "declining business conditions."

Earlier in the summer, Russian-operated NLMK USA steel mill laid off almost 100 employees in bellwether Mercer County, Pennsylvania, blaming Trump's tariffs on the imported steel slabs it processes. 

Congressman Mike Kelly, a Trump supporter, pleaded with the White House for help to no avail.

Mercer County gave Trump a major boost in 2016, with a surging Republican vote tally helping put him over the top statewide.

Red areas in the red

Across the nation, the manufacturing slump is hitting Republican counties hardest, according to data from the Brookings Institution.  And in battleground states, the picture is even more stark.

In the Wisconsin and Michigan counties that Trump won, manufacturing accounts for about one in every five jobs. In the Democratic areas, it only accounts for about one in 10.

"To the extent that the economy shapes political behaviour -- which it may not at this stage because we're so deep into the tribal stalemate -- this slowing maybe inconvenient" for Trump, said Mark Muro, a senior fellow at Brookings.

Olive McKeithan, Democratic mayor of Farrell, Pennsylvania, home of the NLMK steel mill, told AFP the layoffs were a major blow to her city's voters and tax base.

She blamed Trump and his tariffs.

"Everyone who voted for No. 45, I hope they are happy," she said.

But Matthew McConnell, the Republican chairman of the Mercer County board of commissioners who is himself a former steel worker, said support for Trump was undiminished.

"If you had the election today, you would have even larger support for Trump," he told AFP.

Challenging China's unfair trade practices was a necessity, he added.

"He had no ill will toward NLMK employees but, being a business guy, you sometimes have to make decisions for the betterment of the majority."

Story highlights

Auto plants and steel mills are shutting down. Companies are announcing layoffs and furloughs. Factory output is in the red.