“The economy, stupid.”
In 1992, campaign strategist James Carville coined this memorable phrase, succinctly and colorfully summing up Bill Clinton’s priorities as a presidential candidate. Thanks to a recession that started the year before, popular incumbent George H. W. Bush was made vulnerable to a challenge from a younger, fresher Democratic nominee. Clinton easily won the 1992 election and survived a disastrous first midterm by again focusing on the economy.
Nearly 30 years later, President Trump might find himself in a similar position as the first President Bush, only perhaps even more vulnerable to economic reversal. And Trump’s economic woes could be former Vice President Joe Biden’s 2020 gain.
Trump has no war record nor splashy victory in a conventional war — as Bush had with Iraq in early 1992 when his approval rate spiked to near-universal acclaim — to cushion the blow of a recession. Trump ran on economic renewal and the potential for spectacular growth through deregulation, tax reform, and a pugilistic trade policy. With his other major campaign platform — immigration and border security — tied up in court actions and a stalemate with Congress, Trump needs the economy to keep performing at a high pitch.
Thus far, the economy has cooperated with Trump, even through the first stages of a trade war with China. Real wages have grown at a faster rate under Trump than with the previous administration, thanks to the elimination of the overhang of sidelined workers left over from the Great Recession. Four of the nine full quarters of the Trump presidency have seen annualized growth in the gross domestic product (GDP) of over 3 percent. Even in the midst of a tariff fight with China, the most recent quarter showed a surprising GDP growth rate of 2.1 percent.
Recent signals, however, have economists worried that the run of positive growth might soon come to an end. A research note from Goldman Sachs’ chief economist warned that “fears that the trade war with China will trigger a recession are growing,” while Bank of America economists raised the odds on a recession over the next year from 20 percent to 33 percent. “We are worried,” they warned, especially since “our model likely does not fully capture the threat of U.S.-China trade tensions spiralling into a more severe trade war.” Democratic presidential contender Sen. Elizabeth Warren (Mass.), whom PolitiFact credits with predicting …read more
Source:: Business – The Week