NPR’s Scott Simon talks with economist Megan Greene about the health of the economy and what indicators she’s keeping an eye on.

SCOTT SIMON, HOST:

Are we booming or about to bust? This week, Apple cautioned investors not to expect strong sales because the Trump administration’s trade war with China. And the Institute for Supply Management said that its measure of U.S. manufacturing took the steepest dive it’s had in a decade. But then, yesterday’s upbeat employment report said that U.S. employers added 319,000 jobs in December; analysts were expecting 180,000. So what’s the panic? We’re joined now by Megan Greene. She’s the chief global economist at Manulife Asset Management. Thanks so much for being with us.

MEGAN GREENE: Thanks for having me.

SIMON: Do you think the U.S. economy is basically healthy?

GREENE: So the U.S. economy is in pretty good shape. The economic fundamentals look decent, even though we’ve had a couple of bad news headlines recently. So the ISM survey data came in much weaker than expected but still reflected an expansion in terms of manufacturing and manufacturers’ expectations for output, employment and new orders – so still in growth territory. We grew well above potential growth last year, and potential growth is around 2 percent. So I do think we can expect a slowdown this year. But, again, it’s a slowdown from really high levels, so I think we’ll still have growth of somewhere between 2 and 2 1/2 percent for 2019. That’s hardly bad news for a developed economy.

The confidence in the U.S. continues to hit postcrisis highs every month. So when you ask consumers and businesses how they’re feeling about things, they say they’re feeling great about the economy. When you look at how they’re actually spending their money, though, the data is not quite as ebullient. So it’s not quite as boomy. So if you look at retail sales to measure the health of the consumer, for example, consumers are saying they feel great, but they’re not actually spending that much. It’s still in growth territory, but it’s not what you would expect based on how they’re reporting they’re feeling. You might have seen a lot of pessimism in the markets recently. And I don’t think that that’s an economic story for the U.S. at all. I don’t think that it’s justified based on the U.S.’ macroeconomic fundamentals.

SIMON: Well, why the pessimism then?

GREENE: One thing that I do think is really driving the markets is what’s happening in China as well. So Chinese data has come out and has been unequivocally awful, I would say. So retail sales growth has been really weak in China. Their survey data suggests that demand in China and abroad has been much weaker. You know, it’s justifiable for the markets to worry a bit about that. If China were to slow down, that doesn’t mean that the U.S. is going to go into recession, though, unless China had a really surprise hard landing now. And until very recently, the markets have been worried about the Fed killing off this recovery. And I think that’s a fair concern generally. They say that, you know, recoveries don’t die of old age, they’re murdered, and usually the Fed is the key suspect. But recently, the Fed has revised its path for normalizing rates downward so that it’s more dovish, more gradual. I don’t think that we’ll end up seeing the Fed kill off this recovery, but the markets have been really worried about it recently.

SIMON: What features of the economy do you look at?

GREENE: So if you’re looking for forward-looking data – because most economic data is actually backwards-looking, particularly labor market data – if you look at the survey data, it will give you an indication of new orders, both domestic and foreign. And that’s a great indicator of the strength of manufacturing and services. And the two ways to fundamentally boost your potential growth or productivity growth and your labor supply – and in terms of productivity growth, the way to boost it is with more investment, more capital expenditure. And this has really been an investment less recovery. But if we saw a boom in investment, that would certainly change most people’s views on things. So I would keep an eye on that. And the labor supply is effected a lot by immigration policies, so I would keep an eye on that as well.

SIMON: Megan Greene with Manulife Asset Management, thanks so much for being with us.

GREENE: Thanks for having me.

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NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Low gas prices combined with fuel economy improvements are driving consumers back to SUVs and trucks. 2019 will see the demise of many small cars, leaving first-time car buyers with fewer choices.

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It’s the big goodbye for some small cars. That’s as more and more Americans buy larger vehicles like crossovers and SUVs. As Michigan Radio’s Tracy Samilton reports, some of the cars going away at the end of this year will be missed more than others.

TRACY SAMILTON, BYLINE: Some people will be sad not to see a new Cruze at the Chevy dealership. A few may mourn the Cadillac CT6, STS and Buick LaCrosse and wonder why Ford is axing nearly all its cars by year’s end. And there’s certainly nostalgia as Volkswagen ends the Beatle’s exceptionally long run, fueled largely by its flower power image from the ’60s. But the Chevy Volt? Oh, not you, too. John Schaeffer owns one. So does his wife. So do 3 of his 4 daughters.

JOHN SCHAEFFER: I plan on driving mine till the wheels fall off. I’m not planning on buying any other cars anytime soon. Honestly, you know, people say, well, what about when the battery dies? You know what? I’ll put one in it.

SAMILTON: That passion is pretty typical for a Volt owner, but sales were anemic, as was the case for most of the cars being pulled out of production this year. Meanwhile, auto analyst Alan Baum says crossovers like the Ford Escape and Chevy Equinox these days come close to competing with many cars on fuel economy.

ALAN BAUM: The crossovers are very much like the cars they are replacing. The difference being, No. 1, they have more utilitarian value. And, No. 2, they’re able to be priced at a higher level which obviously creates more profit.

SAMILTON: The end result? Fewer choices for consumers. Michelle Krebs with AutoTrader says some automakers, though, might see a bump in sales.

MICHELLE KREBS: Consumers who are on budgets, first-time new car buyers tend to go to the small car segment, for example. So they’ll be going to things like Toyota Corolla and Honda Civic instead of Chevy Cruze and Ford Focus.

SAMILTON: But will Ford or GM someday regret ditching small cars? Stephanie Brinley with IHS Markit says, probably not.

STEPHANIE BRINLEY: Will they come to a point somewhere down the road where they need to figure out how to build another compact car again? Maybe. It’s not likely to happen soon.

SAMILTON: Especially in the era of cheap oil and low gas prices. For NPR News, I’m Tracy Samilton.

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NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

President Trump has ordered a pay freeze for the federal workforce, sparking protests at a time when hundreds of thousands of federal workers are already furloughed or working without pay.

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Hundreds of thousands of federal employees have gone without pay for more than a week now. And the financial squeeze may outlast the partial government shutdown. President Trump has ordered a pay freeze in 2019 for all civilian federal employees. NPR’s Scott Horsley reports.

SCOTT HORSLEY, BYLINE: The president’s been telegraphing his plans for a pay freeze for almost a year – first in his annual budget and again last summer in a letter to Congress. Trump pointed to the government’s dire fiscal situation. Thanks to tax cuts and increased spending, the deficit has ballooned to more than a trillion dollars this year. It’s just bad timing that the president’s formal order for the pay freeze comes in the midst of the partial government shutdown. Some 800,000 federal workers are already furloughed or required to work without pay.

JACQUELINE SIMON: It is adding insult to injury.

HORSLEY: Jacqueline Simon’s with the American Federation of Government Employees, the largest federal workers union.

SIMON: Just to put an exclamation point on the fact that the administration doesn’t really have any concern whatsoever for the economic well-being of 800,000 middle-class families.

HORSLEY: The president’s penny pinching on civilian workers stands in marked contrast to his professed generosity towards the military. Just last week in Iraq, Trump falsely claimed to have boosted military pay by 10 percent.

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PRESIDENT DONALD TRUMP: I had plenty of people that came up. They said, you know, we could make it smaller. We could make it 3 percent. We could make it 2 percent. We could make it 4 percent. I said, no. Make it 10 percent. Make it more than 10 percent.

HORSLEY: In fact, service members are getting a pay raise of 2.6 percent this coming year. And Simon says their civilian counterparts welcome that.

SIMON: Of course, the military deserve their pay increase, and we’re strongly in favor of it. And, in fact, for many, many years – decades, even – there was parity between the civilian and the military workforces in terms of their pay adjustments.

HORSLEY: For the last two years, though, paychecks for civilian government workers have grown more slowly than those in the military. And the president’s pay freeze would widen that gap if it stands. But Simon’s counting on lawmakers to undo Trump’s order. The Senate has already OK’d a pay raise for federal workers of 1.9 percent. And the new Democratic House is expected to follow suit. Scott Horsley, NPR News, Washington.

Copyright © 2018 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

NPR’s Don Gonyea speaks with Financial Times global business columnist Rana Foroohar about the recent market volatility, and what it could mean for the economy in 2019.

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The markets have been on a rollercoaster ride this last week. We had one of the largest gains of the year only to have it drop again. This whiplash is leading to a lot of uncertainty. Here today to help us make sense of it all is Financial Times columnist Rana Foroohar.

Welcome. Thanks for joining us.

RANA FOROOHAR: Thanks for having me.

GONYEA: So why are we seeing this volatility right now?

FOROOHAR: Well, there’s a few reasons, and some of them are long-term reasons that we knew were already in the mix. And that’s the fact that, look – it’s been 10 years of a recovery cycle. It may not feel like that to some people, but we’ve actually been in an economic recovery for a long time now. So we were due for a bout of volatility and possibly even a market correction. So that’s one of the factors that are in the mix right now.

There are other things that are more specific to this administration and the politics of the moment. President Trump’s trade war with China over the last few months has created some market jitters. And, in recent days, his questioning of Jerome Powell’s authority at the Fed, and also treasury secretary Steve Mnuchin coming out and saying, well, the banks have enough money if there’s a downturn – well, it makes people wonder, are we going to have a downturn? That increases jitters as well.

There’s also a certain amount of volatility that’s natural during a holiday period when a lot of people are not trading. There’s money on the sidelines. That increases volatility as well.

GONYEA: Well, you mentioned the White House and some of the signals coming out of there. How much impact is this president having on the markets with his tweets?

FOROOHAR: Well, quite a bit, unfortunately. As I say, we’re already at a point where we were probably due for some troubles anyway. China’s slowing. Europe is looking to be more volatile. So there were already trouble. But he is pouring kerosene on that fire with his tweets. This is a time when we are probably going to be slowing down economically, possibly having market volatility, possibly having a correction. What we need is a president that is reassuring, making stable policy decisions and supporting the market and supporting the people that are in charge of the market, like the Fed. And that’s not happening.

GONYEA: You mentioned that we’re in a transition and that the financial narrative is changing. What is it…

FOROOHAR: Yeah.

GONYEA: …Changing to?

FOROOHAR: Well, the last 10 years, even though we’ve been recovering from the financial crisis of 2008, there’s been a single narrative. And that has been that interest rates are low. Money is pretty easy. The Fed is bolstering the markets. Well, recent data – low unemployment rates, pretty good growth over the last few quarters – has forced the Fed into a different position. There’s been a rate hike. There may or may not be more rate hikes in the future, but it’s clear that we’re moving out of this decade of easy money, and we are moving into a period that, frankly, is more like a historic normal where you are going to have ups and downs.

You are going to have turmoil in the markets. There are also industry-specific issues like the FAANGs – Facebook, Apple, Amazon, Netflix, Google. All the tech stocks are under threat from regulation. And those are the stocks that have lifted the markets in recent years, and they’re now leading the downturn.

GONYEA: And this volatility, this changing narrative – what does that mean for the average investor?

FOROOHAR: Well, it depends on what your horizon is in terms of your money. If you’re saving for your retirement, and you’re not going to need that money for a number of years, the key really is to sit tight. You do not want to sell or make any sudden portfolio moves in a period of volatility. Now, if you need your money, if you need cash in the short-term future in the next month and maybe the next year, then it’s possible that you do want to wait for one of the up cycles, which is bound to come. We’re going to see lots of ups and downs in the next few months, so you might want to move your investments into more conservative places or even to cash.

GONYEA: What advice do you give people who are thinking of investing or who are just worried about their 401(k)?

FOROOHAR: Well, again, I would say that if you have a medium- to long-term horizon, don’t make any sudden move. U.S. stocks are still a pretty good place to be. Oftentimes, when there’s a global slowdown, you start to see a lot of people going into U.S. assets because they’re considered a safe haven. Now, this administration and the politics of the moment has definitely created some jitters. But the time to sell, the time to shift your retirement assets, is not in the middle of a change cycle economically like we’re going through. Sit tight, don’t make any sudden moves and be prepared to strap in for some more volatility.

GONYEA: Rana Foroohar is with the Financial Times.

Thank you.

FOROOHAR: Thank you.

Copyright © 2018 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.