Baseline numbers to grade Trump's report card

Donald Trump ran on a platform of making America great again. That goal can be interpreted in various ways, but let's focus on some key metrics that measure the economy and the nation's affluence.

The following are some of the financial yardsticks that will become the baseline measurements for grading Trump. If the new president succeeds in making America great again, or at least better, most of these indicators will show improvement four years from now.

Jobs: This was a key campaign platform, with Trump bemoaning the slow-growth economy and criticizing multinational corporations that send jobs overseas. Already, his comments have had an impact, with Ford Motor just canceling plans to build a factory in Mexico, investing instead in Michigan.

Still, Trump has his work cut out for him if he wants to improve significantly on employment. The national jobless rate in November stood at a fairly low 4.7 percent at the end of 2016,  and the nation added more than 2 million net new jobs during the year. Another key metric to watch is the labor-participation rate, which tabulates the percentage of adults who are employed or looking for work. The trend here lately hasn't been favorable, indicating a lot of people have just given up. The rate of 62.7 percent in December was down three full points from when President Obama took office in January 2009.

The rich-poor gap: A lot of Americans haven't progressed financially in recent years. This has focused attention on the rich-poor divide, which is shaped by a lot of factors that the new president will have influence over — from tax rates to jobs, from retirement plans to housing policies.

Many people are struggling, with 48 percent of Americans claiming to live paycheck to paycheck, according to a December survey by the National Endowment for Financial Education. But not all studies on this issue have reached pessimistic conclusions. For example, the Pew Research Center determined that while the middle class did shrink slightly from 2000 to 2014, it's partly because more people moved into the upper range than dropped into the lower. Pew estimated 20 percent of households in 2014 were upper, 51 percent middle and 29 percent lower. The same figures in 2000 were 17 percent upper, 55 percent middle and 28 percent lower.

These trends could affect your money in 2017

One key statistic on which to judge Trump's presidency is household net worth, compiled by the Federal Reserve. The latest figure of $90,196 for the third quarter of 2016 marks the seventh yearly increase following losses during the recession. Another is national bankruptcy filings, which have declined steadily and are on pace to drop below 800,000 when full 2016 results are in.

Trade: Trump has upended the globalization apple cart with threats to start trade wars, especially against China and Mexico. That sets the stage for tensions that the new White House could utilize to negotiate more favorable deals, at the risk of unleashing damaging fallout. China accounts for about two-thirds of the current U.S. trade gap. The European Union, primarily Germany, also enjoys a sizable edge with the U.S., as do Mexico and Japan. The U.S. runs a surplus in services — retailing, logistics, finance, travel and the like — but the gap in automobiles, electronics and other goods is much wider.

Trump succeeded in elevating trade to a major campaign issue even though the problem isn't as big as it had been. The U.S. ran annual deficits exceeding $700 billion from 2005 through 2008, but the red ink has narrowed in recent years. To be successful, Trump will need to get the overall trade gap down from around $500 billion. That's the latest full-year number, from 2015. Preliminary 2016 results are in the same ballpark. But it won't be easy: The U.S. has spent more money on imports than it generates from exports every year since 1975.

Taxes and the deficit: Trump has pledged to cut income taxes. The current top rate for individuals is 39.6 percent, which Trump wants to whittle down to 33 percent. Corporate tax rates could get slashed from 35 percent to 15 percent. Tax planning also could get simpler. Roughly two-thirds of taxpayers today take the standard deduction rather than itemize, and that proportion could rise if Trump succeeds with his proposal to more than double the standard deduction. The new president also wants to implement other landmark tax moves, such as eliminating the estate tax and the alternative minimum tax.

The flip side of tax cuts is heightened government financial pressure. With presumably less tax revenue coming in, the federal deficit could mushroom. Washington ran a $587 billion deficit in 2016, and the accumulated debt now stands just shy of $20 trillion. Those are two key benchmarks to use on Trump's report card.

Mantra for 2017: Be careful of bond risks

The stock market: The market is a good gauge of corporate profits and economic expectations, and it provides a real-time (if fickle) measure of the national mood. It's hard to imagine the investment climate could become much more bullish under Trump, given that stock-market yardsticks such as the Dow Jones Industrial Average and Standard & Poor's 500 index are flirting with record highs. Stocks have flourished over the past eight years, with the Dow up 11,800 points or 149 percent, excluding dividends, from President Obama's inauguration on Jan. 20, 2009, through the end of 2016.

So far, investors mostly have reacted positively to Trump's election and GOP gains in Congress, with stocks rallying after the election. If the economy and corporate profits improve under Trump, the stock market will follow (or more accurately, lead the way). Trump's pledge to cut corporate tax rates, which could repatriate a lot of cash held in foreign subsidiaries, is a favorable wildcard.

Inflation and interest rates: Trump will have a tough time improving on these measures. Inflation has been extraordinarily mild in recent years, while interest rates touched record lows during President Obama's eight years in office. Then again, low interest rates and inflation don't tell the whole story, especially since they reflect an economy marked by subpar growth in recent years.  And while low interest rates have helped homeowners and other borrowers, dismal yields on bank deposit accounts have made life tougher on retirees and other savers.

Here are a couple key numbers that can be used to grade Trump's progress: Inflation (as of November) was running at a 1.7-percent annual pace, while 10-year Treasury notes, which are used to set interest rates on 30-year mortgages, ended 2016 yielding about 2.45 percent.

Reach Wiles at russ.wiles@arizonarepublic.com or 602-444-8616.