Depending on whom you talk to, the economy is either soaring or sinking. Which side is right? Well, both ...
The consumer side of the economy remains strong. The unemployment rate is at a generation low, and take-home pay is steadily rising. In fact, we’re in the third straight year of wage growth. With greater job security and more income, people are spending money. Retail sales beat expectations in June.
On the business side, however, the picture is less bright. Companies are taking stock of the uncertainty at home and abroad – most notably the escalating trade war with China – and sitting on their cash. This has resulted in the first decline in business investment in three years. The manufacturing sector has been in a downturn since December, and farm incomes have plummeted. Wild swings in the stock market are amplifying concerns. And inverted yield curves in the bond market have some warning that a recession is imminent.
Whether our economy expands or contracts depends largely on what our leaders do next. As Congress reconvenes today and Washington officially gets down to business for the rest of the year, we are urging leaders on both sides of Pennsylvania Avenue to focus on three priorities.
First, de-escalate trade tensions with China. U.S. executives are overwhelmingly concerned with the impact of tariffs on business performance. The uncertainty stemming from deteriorating U.S.-China relations is driving away business investment and inching us closer to a recession. The solution? A détente in the tit-for-tat trade war. President Trump and President Xi Jinping should lift the tariffs hurting both economies and restart trade negotiations immediately.
Second, approve the U.S.-Mexico-Canada Agreement (USCMA) as soon as possible. Updating North American trade relations for the 21st century will grow the digital economy, protect intellectual property, and strengthen American agriculture. Most important, it will protect 12 million U.S. jobs and boost business confidence at a critical time for our economy.
Third, revitalize our nation’s infrastructure. Enactment of an infrastructure bill – such as the bipartisan surface transportation proposal in the Senate – would support the economy in the short term and contribute to long-term growth. Moreover, it would signal that Washington is capable of taking necessary steps to tackle tough issues and support economic growth, which would go a long way in bolstering business optimism.
Following through on these priorities will help restore business certainty. If our leaders in Washington do their jobs and make smart choices, businesses can keep doing what they do best: invest, grow, hire, and keep the economy working for all Americans.