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Wages, economic growth and manufacturing—3 metrics Trump should avoid in tonight’s State of the Union Address

February 4, 2020, 10:13 AM UTC

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Good morning, Bull Sheeters. Asia, Europe and the U.S. futures are all trading up this morning (as I type). That’s no small feat considering the latest grim coronavirus headlines—the first virus-related death in Hong Kong and the number of cases topping 20,000— plus the puzzling lack of news out of Iowa.

This morning I’m going to move off the global pandemic beat (I’m sure you don’t mind) and head stateside. Tonight is President Trump’s State of the Union speech.

For the occasion, I’ve prepared a few charts (three to be precise) that I’m fairly certain will get zero mention in the SOU. Each chart tells us something about the state of the economy.

Let’s jump right into it.

Employment vs. wages

At 3.5%, the U.S. unemployment rate is the envy of the developed world. It’s at a half-century low. You will hear this data point tonight. And it will get plenty of applause.

But wages are nothing to boast about. As the first chart shows, wage growth has ticked up only slightly under Trumponomics. The average American worker sees a 0.2% fatter paycheck (not factored in for inflation) compared to the day Trump was sworn into office in January, 2017.


As the chart above shows, the rate of American wage growth is less than it was a dozen years ago. We have yet to climb back to where we were in September, 2008 when Lehman Bros collapsed.


What about manufacturing?

I’d wager Trump won’t dig too deep into the manufacturing numbers tonight. The trade wars, the Boeing mess, the slowing global economy are all doing a job on the “Made in the USA” brand.

Now, the White House did get a strong reading just yesterday of factory activity. We can only hope that wasn’t a blip. But take a look at orders on durable goods (excluding aircrafts). If you run an American company that makes stuff, you know this next chart well.


Throughout much of 2019, and particularly in the second half of the year, durable goods orders were more down than up, month-on-month. Maybe a thawing of the U.S.-China trade wars will improve this picture. Or…maybe the coronavirus will exacerbate it.

You call this growth?

Yes, America is growing. But these GDP numbers are nothing to crow about. The best you can say is it is better than Europe.


Growth is slowing. That’s the trend for all three trading powers. You can bet that economists are already recalculating (downwards) 2020 growth projections, factoring in the coronavirus impact.

There are economic achievements Trump can hail tonight: housing starts, consumer confidence, and yes the unemployment rate.

But he’ll be selective in how he presents it. Presidents always are in the SOU.

Bernhard Warner

Correction: Americans’ wages are growing at a slower rate than they were a dozen years ago—not that Americans are earning less. The newsletter has been corrected to reflect that change.

Today's reads

Calling all bears. The hit to oil demand caused by China’s deadly coronavirus outbreak is worrying Saudi Arabia. Oil prices finished Monday in bear-market territory, down more than 20% from their recent peak. The kingdom is pushing OPEC to respond with a deep, short-term cut in oil production of around 500,000 barrels a day, The Wall Street Journal reported. Representatives of OPEC and its allies are set to meet Tuesday and Wednesday to debate possible action, which could include a decision to reduce output at a possible meeting next week.

Pedal power. It turns out that those controversial ‘Peloton wife’ ads may not have hurt the fitness company’s sales after all, Fortune’s Anne Sraders reports. Peloton's now-infamous holiday ad, featuring a woman using the bike her husband gave her for Christmas, was deemed sexist by some. But Wall Street analysts predict that Peloton's second-quarter earnings on Wednesday will show the company has pedaled over the bumps in the road toward strong earnings. In fact, the ad’s notoriety appears to have made people much more aware of the brand as there was a surge in U.S. web searches for “Peloton” towards the end of last year.

Steadier stocks. Chinese stocks rebounded on Tuesday after falling by up to 9% yesterday, their biggest sell-off for more than four years, due to the coronavirus outbreak. The benchmark CSI 300 index of leading Chinese shares climbed by as much as 1.6% as Beijing stepped up efforts to defend the economy against the spread of the virus. The central bank steadied nerves by announcing a new cash injection to support China’s financial system.

Market candy

Next stop $7,000? More staggering numbers from Tesla, whose shares have been red hot since the start of the year, shrugging off stock market jitters over the coronavirus outbreak. The electric car maker’s stock surged 20% Monday in its largest one-day gain since 2013. Here's some more numbers to put this Tesla bull run into perspective:  

  • The company benefited from an investor report predicting its shares would rise nearly ten-fold by 2024.
  • Shares have risen by over 30% since the company run by Elon Musk posted its second consecutive quarterly profit last Wednesday.
  • The stock is up over 300% since early June.
  • And investment management firm Ark Invest doesn’t see the rally stopping here. It expects the company’s stock to hit $7,000 by 2024, compared to Monday’s record high of $780.