Trump took a chance on trade and wrecked the economy. Now his chickens are coming home to roost — in the states he needs for 2020

By now, you know the US economy added 128,000 jobs in October -- a not-great number, if better than consensus forecasts. Even so, the number masks a weird duality in recent economic news, one America will revisit throughout its election year.

The economy is working worst for many of the exact industries — and people — President Donald Trump set out to help most. Six months ago, we debated whether a “boom” that was never really a boom would toss him to re-election despite ethical follies now threatening him with impeachment. Now, it’s whether the economy is cracking on him at the very worst time — as ethical follies still threaten him with impeachment.

The bad news for Trump is that the people he needs for re-election are in the path of that.

Consider this week’s news beyond the jobs report, which showed unemployment ticking up to 3.6 per cent, still near a 50-year low. Manufacturing is the smallest percentage of GDP it has been in 70 years, according to a new Commerce Department report. The manufacturing sector is in an earnings recession, with second-quarter profits down 9 per cent, stocks underperforming the S&P 500 as third-quarter reports roll in, and another profit drop expected in the fourth quarter, according to CFRA Research.

And coal companies! Murray Energy, the largest US coal producer, filed for bankruptcy this week, the 8th coal company to do so in the last year. Coal’s share of the market for US electricity fuel has fallen by half, to about 24 per cent, since 2000.

These are Trump’s tribe, or so we’re told. They’re why he carried Ohio by eight points in 2016, and gave him narrow wins in Michigan, Pennsylvania and Wisconsin. Yet, General Motors is closing its Lordstown plant near Youngstown, Ohio and manufacturing employment is down in all four states this year. “Get ready,” Trump promised miners in 2016. “You’re going to be working your asses off!” He promised factory workers a “new industrial revolution.’’

Eep.

The story’s the same in the GDP report, released Wednesday. What’s holding things back is sluggish corporate investment -- a category where manufacturers from Boeing to General Motors play an outsized role. Equipment spending shrank 3.8 per cent. Spending on structures fell more, partly because oil rigs are structures and crude is relatively cheap.

That’s a terrible performance, since investment is about 18 per cent of the economy -- and was supposed to get juiced by the corporate tax cut. At the same time, manufacturers like Caterpillar and 3M also depend on exports to sustain profits (and jobs), and net exports subtracted a tenth of a point from third-quarter GDP.

What do these areas have in common? They were supposed to rise based on Trump policies that failed.

Manufacturing’s weakness, like exports’, is mostly about trade policy. Trump wanted a smaller trade deficit, so he raised tariffs. China responded in kind. Companies like GM and Alcoa warned of the impact -- as many as a third of Standard & Poor’s 500 index companies have blamed trade policy for hurting business. Slower business freezes investment.

Coal is the most obvious case of Trump’s (perfectly predictable) policy failure. The president’s signature move — and centerpiece of his claim that his deregulation boosts growth — is rolling back the Clean Power Plan, Barack Obama’s signature move to reduce carbon emissions that cause climate change.

To own Obama, Trump decided to bet on a fading technology. We’ve seen that movie before — on a VHS cassette. Coal can compete when natural gas costs $6 per million British Thermal Units of heat, Moody’s Investors Service says. It costs $2.52 now, thanks to hydraulic fracking. Trump may as well sell Honda Accords for $100,000.

Trump’s response to companies’ complaints was to tweet that companies were making excuses. This week, he launched a campaign ad hailing an economy that has added 6 million jobs since he took office. Trouble is, the same economy added 11.4 million during Bill Clinton’s first term, and almost 6 million even during the aftermath of the financial crisis in Barack Obama’s first term.

Obama added 16 million jobs by the time he was done, and growth is slowing on Trump now — the US has added only 1.57 million jobs this year, about 30 per cent fewer than in 2015.

If polls be true, voters get it. Trump’s net approval rating (the percentage of people who approve of his performance, minus those who disapprove) is -11.7 nationally, according to Real Clear Politics. In the Midwest, he ranges from -5 in Ohio to -14 in Iowa, according to Morning Consult polling. If the election were today, he’d struggle to win any of the states where he surprised in 2016.

The known lesson here is that you never get anywhere if you buck economic reality.

It would be nice if Trump learned this. Similarly, it would be nice if Bernie Sanders and Elizabeth Warren were more humble about their ability to micromanage whole industries. What we’ll learn soon is the political price for such economic braggadocio.