Trump's economy is worse than it looks

Headlines this week say the job market is “rebounding.” On Wednesday, ADP reported that private employers added 42,000 jobs in October, ending a two-month losing streak. And on its face, that sounds like progress. But read past the first paragraphs of the full ADP report and you’ll see a very different story — one of growth limited to the sectors where people have to spend, and significant contraction virtually everywhere else.

Hiring was concentrated in health care, education, and logistics — fields that serve basic needs and where demand is most inelastic. Meanwhile, employers cut jobs in IT, professional and business services, and leisure and hospitality. That’s the third straight month of white-collar losses, according to ADP’s own tables. Much media coverage has simplistically framed the data as a sign that the job market is “returning to growth.” But a labor market that adds jobs only in necessity fields isn’t a healthy one. Nor can you ask a laid-off copywriter or marketing manager to retrain overnight as a nurse or an HVAC technician.

Similar patterns emerge from household spending and debt

The consumer mirror image of ADP’s jobs report? People still employed but cutting spending where they can. You can see it in restaurant stocks — Chipotle down 50% this year, Sweetgreen off 80% — as younger, cash-strapped customers skip burritos and grain bowls and instead cook at home. McDonald’s latest earnings make the same point from another angle. The company has reported double-digit declines in visits from low-income customers and flat traffic among the middle class. Only the wealthiest households are still dining out freely. To keep sales growth even marginally positive, McDonald’s has leaned hard on “everyday value” deals like its $5 Meal Deal.

Meanwhile, the Federal Reserve’s new household-debt report shows balances climbing to $18.6 trillion, up nearly $200 billion in the third quarter. Credit-card debt hit another record at $1.23 trillion. Delinquencies remain “stable,” but that stability is deceptive: serious delinquencies are up 80% from this time last year, student-loan defaults are near 10%, and the share of borrowers rolling over balances every month is rising. Americans are borrowing just to stand still.

The pattern runs through affordability metrics, too. Auto-loan delinquencies are now higher than both credit-card and mortgage delinquencies, with one in five borrowers paying more than $1,000 a month for a car. The median age of a first-time homebuyer has surged to 40, the highest on record, as prices and rates lock younger Americans out of ownership entirely. Even travel has lost altitude — Las Vegas visitor traffic is down 9% this year, the steepest drop since 2008.

And yet policymakers are flying blind. The Bureau of Labor Statistics remains dark amid the government shutdown, now the longest in U.S. history, meaning the Fed is effectively cutting rates into the dark — without crucial data on inflation, jobs, or retail sales.

Put those pieces together and the picture snaps into focus

White-collar layoffs suggest a hollowing of the job market, while overall wage growth is flat. Household spending hasn’t crashed, but it is being cut, and households are more leveraged than they used to be.

This is, arguably, why the economy feels so much worse than it looks. The headline numbers average out the extremes, but the underlying picture is one of wealthy consumers thriving and everyone else trading down, borrowing more, or wondering if they should “learn to craft.” Lucrative work and white-collar work are going missing, and many households are operating with little margin for error — much less the budget for a burrito bowl or snack wrap.