News of trade wars, inverted yield curves and the Dow Jones Industrial Average falling wasn’t enough to dissuade Commerce Secretary Wilbur Ross from reinforcing the strength of the real economy
With a strong labor market highlighted by a generationally-low unemployment figure and strong sentiment from various sources, Ross has misgivings that the proverbial sky is falling on the U.S. economy. According to the Indeed Hiring Lab, the “unemployment rate fell from 4.1% in December 2017 to 3.7% in October 2018–well below what the Federal Reserve thinks unemployment will be in the long run.”
However, he is quick to cite that the media is to blame for the negative news permeating the capital markets.
“First of all the economy itself is really strong,” Ross said during an interview on CNBC’s “Squawk Box.” “You’ve seen the unemployment figures; you’ve seen the new claims; you’ve seen industrial production; you’ve seen executive confidence; you’ve seen consumer confidence. Those are all very, very high.”
“It’s the press that seems more obsessed with what may lie in the future,” Ross added.
Fears of an economic slowdown caused the Dow to sink to a low not seen since October 10. Meanwhile, the S&P 500 declined by 3.2% as it dipped below its 200-day moving average and the Nasdaq Composite shed 3.8% to fall back into correction territory.
Adding to the news in a downtrodden market is the reality setting in that the trade war between the U.S. and China is far from settled until an actual agreement between the two economic superpowers is in place. The markets got lifted yesterday on a tailwind of positive news regarding the tariff-for-tariff ceasefire agreed to between U.S. President Donald Trump and China president Xi Jinping at the G-20 Summit, but that optimism was short-lived.