This year has started well with big financial figures out of the United States. The US economy – whether you believe it is the result of President Trump coming to office, or whether you think the strengthening of the economy began during the term of President Obama – is certainly powering ahead.

 

Whether, and for how long, it can continue to do so is another matter. But, as of now, the American financial situation seems to be rather rosy. Trump took office exactly one year ago, and has repeatedly said that he is behind a new rise in the American economy.

 

The American economy is definitely growing, but growth is still far from the lofty peaks that Trump claimed would be scaled with a growth rate of as high as 6%. The Department of Commerce's last figures, released last month, show that it grew at an annual rate of 3.2% in the third quarter of 2017. Will the economy continue to expand? After the US Federal Reserve put up interest rates three times last year, with the last rise being in December, it is possible that growth could slow in the coming months. However, the increases have only been of 0.25%, and the current rate of 1.25% to 1.50% is still an historically low figure.

 

The next issue is the surge in US stock prices which have seen a record run. The Dow Jones Industrial Average - which follows the shares of 30 major US companies - rose to record highs throughout the past year in a run that stretches back to August 2016, just before Trump's election. And other US stock markets, including the Standard & Poor's 500 index and the Nasdaq index, have also reached historic highs.

 

Trump supporters say that his tax legislation, which was passed shortly before Christmas, and which will help corporations reduce their tax bills, helped to boost US shares. And they see his US-centered policies (making America great again), his reduction of bureaucracy, deregulation efforts and his promises to boost investment in infrastructure as creating the conditions necessary for a further run-up in stock prices in 2018, thus further helping people's savings and pension plans.

 

Then there is the question of unemployment, which is falling – down to 4.1% last month – and close to its lowest-ever recorded level of 3.9% in 2001. Indeed, the 10% peak figure that was hit in 2010 in the aftermath of the global financial crisis now seems a long way off. However, it should be pointed out that this downward trend started during President Obama's term. When he departed the White House, unemployment was already down to 4.8%.

 

One mystery of the current economic situation – and particularly in light of low unemployment figures is why wages remain relatively unchanged. They have continued to be flat all through Trump's presidency so far despite other positive economic indicators. A tight jobs market should logically lead to rising wages as workers raise their demands, however wage growth has stayed in a range of 2.5% and 2.9%, and with no meaningful rise in the last year.

 

But economists are broadly in agreement that if unemployment continues to fall this year, salaries will have to rise – and that is good news for retailers who expect to see some of that extra money in their tills.

 

One school of thought holds that the reason for wages remaining stagnant is that many workers have not yet returned to the jobs market. The number of workers who left the US workforce following the deep 2007-2009 recession was higher than initially believed. That can be identified by looking at the labor force participation rate which refers to the number of people who are either employed or are actively looking for work.

 

Following the global economic crash of 2008, the labor force participation rate slumped dramatically as millions of people lost their jobs. Almost a decade on, it is sometimes forgotten just how deep the financial crisis was with reports month after month of hundreds of thousands of people losing their jobs. The labor force participation rate now stands at 63%. It has remained at that level since Trump came to office – showing that many millions of people are still out of work.

 

The trade deficit is another area where Trump pledged to make a difference, however it is still rising. Trump promised to improve the US trade deficit – indeed he made it a priority. In reality, the trade deficit – caused when imports are higher than exports – has risen to a level not seen since 2008. That might be due to the continuing growth of the US economy, and rising consumer confidence, which have led to an increase in the amount of goods bought by US shoppers from overseas.