Some market analysts now believe the Trump rally moved too fast with investors banking on rapid changes in financial and health-care regulation that may in fact take months or years to wind their way through Congress and regulatory agencies. | AP Photo Trump's 'make America great' plans face a slowing economy The stock market is also showing signs of worry about the direction of the economy in the opening months of the Trump White House.

Donald Trump is inheriting a fairly strong economy from President Barack Obama. The big problem for the president-elect? Things are starting to slow down.

The economy created 156,000 jobs in December, less than expected, and the unemployment rate rose a tenth of a point, to 4.7 percent. Many economists expect the pace of job gains to slow even more in 2017 as the economy hits full employment and the Federal Reserve nudges interest rates higher to avoid inflation, especially as wages start to rise at a quicker pace.


All this could render Trump’s bold promises to “make America great again” hard to achieve, at least in the early months — or even years — of his presidency, before all his promised tax cuts and regulation shredding can have any impact.

“This is an economy that is at full employment right now,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “This is the economy we are going to have, and it’s very hard to see how Trump is going to double economic growth or create 25 million new jobs. The problem is he’s wound the electorate up to have these expectations, and he won’t be able to do it because the economy won’t let him do it.”

There is one strongly positive sign for the early days of Trump’s presidency in the December jobs report. Worker pay rose 0.4 percent during the month. Paychecks are now growing at a 2.9 percent annual pace, the fastest since the beginning of the economic recovery in 2009.

Employers now have to pay more to attract a dwindling pool of qualified workers. And higher take-home pay tends to make people spend more and feel better about the economy. Part of the reason Obama didn’t get much credit for slicing the jobless rate in half was that wages remained stuck for much of his presidency. That is no longer the case, and Trump will take office just in time to get some of the credit.

In fact, he has already taken credit for an improved outlook among American consumers, touting a sharp rise in confidence after his surprise win in November. “The U.S. Consumer Confidence Index for December surged nearly four points to 113.7, THE HIGHEST LEVEL IN MORE THAN 15 YEARS! Thanks Donald!,” Trump tweeted last month.

But even strong wage gains could prove troublesome for Trump if they pick up more speed and encourage Fed Chair Janet Yellen and her colleagues to push interest rates up faster in 2017 to snuff out potential inflation. Yellen last month suggested the Fed could hike rates three times this year.

She also suggested that Trump’s plans for a big fiscal stimulus through corporate and individual tax cuts and increased spending could encourage the Fed to move faster on rate increases. That could set up a scenario under which Trump is trying to light a rocket under the economy and Yellen keeps taking away the fuel.

“We expect unemployment will keep falling and wage gains will continue to accelerate in the year ahead, putting pressure on the Fed to keep tightening,” Jim O’Sullivan of High Frequency Economics wrote in a note on Friday.

Trump could also wind up in a situation in which his own policies, especially on immigration, prevent the economy from hitting a higher gear. As the supply of available labor in the United States decreases, economists say, many businesses will be hoping for increased immigration, especially among skilled workers, to fill available slots. Trump campaigned on a platform of limiting immigration and building an impenetrable wall with Mexico.

“The only way to kick job growth into a higher gear is through more immigration, clearly more skilled immigrants, but I would argue we also need more unskilled immigrants because there will be very acute labor shortages very shortly,” said Mark Zandi, chief economist at Moody’s Analytics. “But everything points to policies that will thwart immigration, and that means less job growth.”

The stock market is also showing signs of worry about the direction of the economy in the opening months of the Trump White House. After staging sharp gains following Trump’s win on hopes that unified GOP control of Washington would deliver big tax cuts and fewer regulations — and thus more spending and higher corporate profits — stocks have since stalled.

The Dow Jones Industrial Average for weeks has struggled to break through the psychologically important 20,000 barrier. Stocks were up modestly in midday trading Friday, with the Dow close to breaking though 20,000 after the modest December jobs report.

Some market analysts now believe the Trump rally moved too fast with investors banking on rapid changes in financial and health care regulation that may in fact take months or years to wind their way through Congress and regulatory agencies.

“There is a risk that companies and industries that saw a strong reaction to Trump’s win on the expectation of deregulation moved too quickly,” said Michael Obuchowski of Merlin Asset Management. “The run-up overall was probably too quick, and you would expect some re-analysis of whether it was really justified.”

Trump will have leeway to move more quickly to rescind some of Obama’s regulations, especially on energy, which could lead to an increase in coal mining jobs, or at least a slowing in the pace of job losses in the industry. But unwinding major legislation like the Affordable Care Act or the Dodd-Frank financial reform bill could take years.

And Trump’s big plans to boost economic growth from its current 2 percent pace to 4 percent or more and create 25 million new jobs over 10 years rely on the stimulative impact of slashing corporate and individual tax rates. Getting these plans through Congress could take much of the year, especially if fiscally conservative Republicans mount any opposition to the deficit impact of big tax reductions.

And even if Trump can muscle through his tax and spending plans, which include significant infrastructure investment and the cost of a new border wall with Mexico, their impact on the economy would not likely be seen until 2018 or 2019. Throw in a potential trade war if Trump follows through on promises to slap big tariffs on Mexico and China, and he could be struggling with a slowing economy for several years.

“You really don’t want the measure of success for him to be top-line job growth and the unemployment rate, because we are at or near full employment,” said Douglas Holtz-Eakin of the conservative American Action Forum. “And it’s hard to imagine flicking the switch and seeing second-quarter growth next year that looks substantially different than what we have right now. The structural changes that will make and keep America great will take a lot longer.”