President Donald Trump's first State of the Union speech on Tuesday evening will be another chance for him to boast about the “roaring” US economy.
The economy is hardly booming. It's doing fine.
Yes, the unemployment rate is at a record 17-year low, but wages are barely rising. Yes, the economy added 2.1 million new jobs in 2017, but it did so at a slower pace than the past six years. The economy grew by 2.3 percent in 2017 — better than 2016, but not 2015. Yes, the stock market is definitely booming — a sign of Wall Street's enthusiasm about recent tax cuts. But the Dow Jones Industrial Average is hardly indicative of the US economy's fundamental health.
All of these factors suggest that the US economy is continuing the slow expansion it was experiencing in the years before Trump took office.
"You can mostly thank a slow-but-steady domestic rebound — what you would expect after a financial crisis — and a synchronized global recovery years in the making. Trump hasn’t been in charge long enough to really take credit for what’s happened thus far," writes James Pethokoukis, an economist at the conservative American Enterprise Institute.
Even though the economy is getting stronger, that doesn't mean all Americans are feeling it. Here are three areas of the US economy that remain troubling:
1) Job prospects for Americans without college degrees remain grim
It hasn't gotten much easier for Americans who didn't go to college to get work. In fact, this is the group that has benefited the least from all new jobs created during Trump's first year in office (and the final years of the Obama administration, for that matter).
In the past 10 years, all net jobs added to the US economy (jobs created minus jobs lost) were for college graduates, according to a Brookings analysis of Department of Labor data.
Even in 2017, that trend continued. Last year, the economy created only 180,000 jobs for high school graduates who didn't go to college, according to data from the Department of Labor. That's nothing compared to the 1.8 million jobs created for college graduates. High school dropouts fared the worst: The economy slashed 175,000 jobs for them.
It's no wonder then why so many low-skilled workers who dropped out of the labor force didn't return. In 2017, the share of high school graduates working or looking for work was stuck at 57 percent. (Ten years ago, it was 63 percent.) For high school dropouts, it stayed at 44 percent. Meanwhile, about 73 percent of college grads were in the labor force in 2017.
The bleak job prospects for Americans who didn't go to college is not new. It's just the continuation of a decades-long trend in the American job market: Factory jobs for low-skilled workers have disappeared or moved abroad, and retail jobs have dwindled with competition from online vendors.
But Trump had promised to change this. His "America First" populism appealed to working-class voters in post-industrial towns, helping turn many blue states red in 2016. So far, he has not delivered the economic prosperity he promised them.
"The booming stock market and great top-line employment numbers have not touched these labor market dynamics," writes Robert Shapiro, a senior fellow at the Georgetown University School of Business and a former economic adviser for President Bill Clinton.
2) Americans are struggling to pay off a record amount of debt
It's a good thing the economy keeps adding jobs, because Americans are drowning in debt.
Household debt added up to $12.9 trillion in the third quarter of 2017, according to the latest data from the Federal Reserve Bank of New York. That was the 13th quarterly spike and the highest amount of personal debt ever recorded — even higher than the previous record set in 2008 (and we all know what happened that year).
While Americans owe most money on their home mortgages, most of the spike from taking on debt comes from credit cards and student loans.
In January, Americans reached a record $1.023 trillion in revolving credit debt, which is mostly credit cards, according to the Federal Reserve. That's more credit card debt than Americans held in 2008, right as the US economy plunged into recession.
Part of it is a sign of consumer confidence, as more people have steady jobs and are more likely to get approved for loans. But the end of 2017 showed a slight uptick in delinquency rates, particularly for credit card debt.
3) The income and wealth gap keeps growing
The gulf between the rich and the poor in the United States continues to widen.
The latest numbers from the US Census Bureau show that the top 5 percent of American households earned an average of $375,088 in 2016 — compared to an average of $12,943 for the bottom 5 percent. This is the largest income gap recorded in at least 20 years, adjusted for inflation.
We see a similar trend when looking at a household's net worth. The wealth gap between the richest American households and the rest of the country is the widest ever recorded, according to analysis by the Pew Research Center.
President Trump's policies will only widen the divide.
The Republican tax bill he signed in December will funnel more money to the wealthiest Americans, as Vox's Dylan Scott explains. While the tax bill initially cuts taxes for nearly every American taxpayer, the benefits are tilted heavily in favor of the richest, according to the bipartisan Tax Policy Center. By 2027, the payouts are even more skewed: The top 1 percent of taxpayers will reap 82.8 percent of the benefits, and the top 0.1 percent earn 59.8 percent of the benefits.
This all means that the United States will probably rank even lower than it already does on global measures of economic equality. The United States currently ranks 23rd out of 29 developed nations on the World Economic Forum's Inclusive Development Index. Only Japan, Israel, Spain, Italy, Portugal, and Greece are worse off.