In his State of the Union address, President Donald Trump made a big claim about recent economic growth, extolling the U.S. for having "."
True, America's economy is strong. But not only is it not the world's hottest -- China, India and a host of other developing nations are growing faster -- it's already significantly cooler than it was just six months ago.
That doesn't mean the country is about to plunge into recession. Most private economists and theexpect the economy to grow at a rate above 2 percent this year. But increasingly, signs are telling workers and investors they shouldn't wait for the expansion to move any faster. Here are the indicators that it has already slowed down.
Unemployment is off record lows
While job creation remains strong, "we are beginning to see signs of weakness under the surface," Deutsche Bank Chief International Economist Torsten Slok said in a note.
Thehas risen from its 50-year trough of 3.7 percent a few months ago to 4 percent in January. The share of businesses saying they couldn't find anyone to hire has stopped rising, and wages last month grew more slowly than expected.
Unemployment for black and Latino workers has also ticked up in recent months because fewer of them were employed in January. Bill Spriggs, chief economist for the AFL-CIO, noted that unemployment for people of color has often been "the canary in the coal mine" for other economic slowdowns.
Company earnings are lower
Last year, businesses had the boost of a tax cut to juice up their profits. This year, they're less fortunate.
Across the S&P 500, analysts are forecasting earnings per share to drop 1.8 percent in the first quarter from a year earlier, the Associated Press reports. Just a few weeks ago, they were predicting higher earnings. If the updated forecasts prove true, it will be the first earnings decline in nearly three years.
Lower profits this quarter are one element that pulled stocks lower on Thursday.
The yield curve
A favorite tool of economists and bond traders -- and generally ignored by everyone else -- the yield curve has a remarkable record of predicting when a recession is approaching.
Here's what it means. Theplots out the return an investor earns on a particular Treasury bond. Because Treasurys are essentially loans backed by the U.S. economy, the size of the return is seen as one proxy of U.S. economic growth.
Typically, the longer the duration of the bond, the higher its yield, reflecting the risk to investors of tying up money for longer periods of time.
Starting in December, however, the yields for some short-term bonds rose above those for long-term bonds. When this "inversion" happens, it's an indicator that the economy is slowing. An inversion of the yield for the two-year and 10-year Treasury has preceded every recession since World War II.
The diminishing growth in some countries abroad is reverberating in U.S. factories. "The sharp slowdown in China, independent of the hit from the trade war, is depressing manufacturing in the U.S. and elsewhere," Pantheon Macroeconomics said in a note.
Advance orders for durable goods -- big-ticket items like cars and appliances -- are growing more slowly this year than in 2018, the latest data show.
But a cooling economy is different from one that's frozen over. The U.S. has a bit more growth left in it, most economists say, even though it may not be at the rapid pace of the last year.
Wrote UBS analysts in a note: "While the US economy is slowing, we don't think it will contract in the next 12 months and expect 2.4 percent growth this year and 2 percent next year."