Trump Is Worried About The Economy And 2020. He Should Be.

The Trump Administration and 2020 campaign are clearly worried about the state of the economy. They should be, because it could be the one thing that dooms his re-election chances.

Harry Enten at CNN makes note of the biggest threat to Trump’s re-election in 2020, the probability that there will be a recession in the coming 18-24 months and the danger that poses to his re-election prospects:

President Donald Trump’s main hope for reelection has been the economy. As I noted earlier this week, Trump’s approval on the economy has averaged 53% over CNN’s last three polls. His overall job approval rating in those same polls among voters has been just 44%.

But what happens if the economy loses some steam? Some indicators, such as the yield curve, suggest this could occur.

Trump’s already shaky reelection chances would likely drop significantly.

Right now, the main reason voters approve of Trump’s job performance is the economy. A CNN poll from late May found that 26% of those who approve of Trump’s job performance said it was mainly because of the economy. That was more than double the next most commonly given answer. Additionally, 8% said jobs/unemployment was the main reason for why they approved of Trump. Among those who disapproved, few said anything related to the economy was the main reason why they disapproved of Trump. For example, only 1% said the Trump tax cuts.

Now, many of those who approve of Trump currently would approve of him regardless of what he did. Still, he’d probably lose some of those who approve if the economy went south. He cannot afford for that to happen. At just 44% approval overall, Trump needs a few lucky breaks even if the economy stays steady. Further, a dip in the economy would probably lose Trump any shot he had at winning over that 9% of voters who approve of him on the economy but not overall.

Remember that when there were signs of an economic slowdown during the government shutdown earlier this year, Trump’s approval rating dropped to about 40% with all voters.

Trump’s reelection chances could hinge on the state of the economy. Take, for example, job growth.

Job growth is a simple measure and fairly predictive of an incumbent’s reelection hopes. I took a weighted yearly average (i.e. from October to October) for each of the final two years before the election and compared this measure to the president’s reelection margin in presidential elections dating back to the end of World War II. I say weighted because the growth the year before the election is weighted more heavily.

Applying this to Trump, we find that the average weighted yearly job growth over the last two years has been about 1.5%. This is the type of growth that is consistent with a close reelection margin. Two incumbents with similar job growth over their final two years (George W. Bush in 2004 at 1.1% and Barack Obama in 2012 at 1.6%) won by less than 4 points.

Of course, Trump’s current level of job growth is far from a guarantee of winning reelection. Gerald Ford had a nearby 1.9% yearly weighted average growth over his final two years, and he lost by 2 points. It makes sense that job growth isn’t a perfect predictor of reelection fortune. Beyond the basic fact that there are plenty of ways to measure the economy, there are issues voters consider besides the economy. For Ford, it was Watergate. For Trump, our May poll suggests it’s likely the issues surrounding his character. The state of the economy suggests a range of possible outcomes from moderate sized loss to moderate sized win.

That range of possibilities for Trump becomes a lot more dire if the economy takes a turn for the south. Let’s say yearly job growth gets cut in half. That would mean a weighted yearly job growth of less than 1.0%. The only two incumbents running for reelection to face that type of economy since the end of World War II were Jimmy Carter in 1980 and George H.W. Bush in 1992. Both lost by more than 5 points.

In other words, even if voters dismissed concerns about his character, Trump would be an underdog if the economy slides.

It’s fairly clear that Trump and his closest advisers are worried about the state of the economy and its potential impact on the President’s fortunes in 2020. This can be seen quite clearly in Trump’s twitter feed, where he continually talks up the economy while simultaneously setting up the Federal Reserve Board, who he has accused of hurting the economy by raising interest rates and then taking too long to start lowering them again, as the fall guy if the economy turns south while dismissing any talk that his trade war is playing a role in the ongoing uncertainty in the economy and on Wall Street. It can also be seen in the comments by one of Trump’s chief economic advisers, Larry Kudlow, who appeared on a number of the Sunday morning shows. Trump repeated that theme when he spoke to reporters after reporters on his way back to the White House yesterday afternoon.

This, of course, is the natural response you’d expect from any White House, and talking up the economy but it’s probably even more of a concern for Trump. While the President’s overall job approval numbers remain historical low, it’s clear that he has benefited from the generally positive state of the economy when you consider the fact that his approval numbers on the economy alone are in very positive territory. It’s worth noting, though, that the latest measure of those numbers, from NBC News and The Wall Street Journal, show his job approval on the economy dipping below 50% for the first time since earlier this year.

This all leads to a weekend report from Josh Boak and Jonathan Lemire at the Associated Press regarding the worries inside Trump World about the economy and 2020:

WASHINGTON (AP) — President Donald Trump is warning of an economic crash if he loses reelection, arguing that even voters who personally dislike him should base their ballots on the nation’s strong growth and low unemployment rate.

But privately, Trump is growing increasingly worried the economy won’t look so good come Election Day.

The financial markets signaled the possibility of a U.S. recession this week, sending a jolt of anxiety to investors, companies and consumers. That’s on top of concerns over Trump’s plans to impose punishing tariffs on goods from China and word from the United Kingdom and Germany that their economies are shrinking.

Though a pre-election recession here is far from certain, a downturn would be a devastating blow to the president, who has made a strong economy his central argument for a second term. Trump advisers fear a weakened economy would hurt him with moderate Republican and independent voters who have been willing to give him a pass on some his incendiary policies and rhetoric. And White House economic advisers see few options for reversing course should the economy start to slip.

Trump has taken to blaming others for the recession fears, mostly the Federal Reserve, which he is pushing for further interest rate cuts. Yet much of the uncertainty in the markets stems from his own escalation of a trade war with China, as well as weakened economies in key countries around the world.

Some of Trump’s closest advisers have urged him to lower the temperature of the trade dispute, fearing that further tariffs would only hurt American consumers and rattle the markets further. The president blinked once this week, delaying a set of tariffs in an effort to save Christmas sales.

Aides acknowledge it is unclear what steps the White House could take to stop a downturn. Trump’s 2017 tax cut proved so politically unpopular that many Republicans ran away from it during last year’s midterms. And a new stimulus spending program could spark intraparty fighting over big deficits.

The hope among administration officials is that a mix of wage gains and consumer spending will power growth through 2020. Yet Trump knows his own survival hinges on voters believing that he alone can prolong the economy’s decade-plus expansion.

“You have no choice but to vote for me because your 401(k), everything is going to be down the tubes,” the president said at a Thursday rally in New Hampshire. “Whether you love me or hate me, you’ve got to vote for me.”

Trump has spent much of the week at his New Jersey golf club, many of his mornings on the links, his afternoons watching cable television and his evenings calling confidants and business executives to get their take on the market’s volatility.

Though he has expressed private worries about Wall Street, he is also skeptical about some of the weaker economic indicators, wondering if the media and establishment figures are manipulating the data to make him look bad, according to two Republicans close to the White House, not authorized to discuss private conversations.

His skepticism has been reinforced by White House officials who have long been inclined to only show Trump rosier economic assessments.

Aaron Blake repeats this theme in The Washington Post and also explains why Trump is specifically choosing to attack his own self-selected Federal Reserve Board Chairman:

With the stock market tanking following Trump’s announcement of new China tariffs — amid other warning signs — the Trump administration on Tuesday gave itself a mulligan and delayed some of the more high-profile tariffs until late this year. That was the first sign there was real concern; Trump after all, had announced the tariffs less than two weeks earlier, and pulling back on them could easily be seen as a sign of weakness in his standoff with the Chinese.

That precipitated a rally in the stock market Tuesday. But then Wednesday, the inverted yield curve — which is generally acknowledged as one of the most prescient indicators of a recession — delivered more bad news. The markets fell again.

And Trump’s reaction to it all should erase any doubt about how concerned he is. He has spent much of the past 24 hours bashing Powell for not cutting the Fed’s interest rate fast enough — even as Powell has already given him some of the cutting he desires.

“Even now, you know, you see the interest rates,” Trump said Tuesday afternoon in Pennsylvania. “I’m paying a normalized interest rate. We should be paying less, frankly. This guy has made a big mistake. He’s made a big mistake — the head of the Fed. That was another beauty that I chose.”

Trump then took Powell to task on Twitter on Wednesday, after the inverted yield curve news.

“The Great [Fox Business host] Charles Payne ... correctly stated that Fed Chair Jay Powell made TWO enormous mistakes,” Trump began. “1. When he said ‘mid cycle adjustment.’ 2. We’re data dependent. ‘He did not do the right thing.’ I agree (to put it mildly!).”

(…)

Trump’s strategy in blaming Powell for whatever lies ahead would seem twofold: 1) He can lean on Powell to give him what he wants for fear of shouldering the blame for anything bad that happens (perhaps forestalling economic pain until after 2020). 2) If and when that bad stuff does happen, he can simply do what he always does and say, “It’s not my fault; this guy wouldn’t listen to me.”

Layer on top of that the complex inner workings of the Fed and economics in general, and very few people will truly know whom to believe. Even if economists side with Powell and blame Trump’s trade war (as they are now), it will be something of a self-fulfilling prophecy: the “deep state” working to take Trump down by kneecapping his great successes on the economy to unseat him, once and for all.

It may not be enough to save Trump’s presidency if such a downturn were to come to pass, but he and some allies in conservative media are clearly already planning for that eventuality. That’s both an indication of how concerned he is and how ugly this all could get.

As things stand, we are now in the 122nd month of the recovery that began in the summer of 2009, making this the longest period of economic expansion in American history. It’s worth noting, though, that this has been a relatively weak recovery, with annual job growth at only 1.4% per year and annual economy growth at just 2.3% per year. This compares unfavorably with the second-longest expansion, which lasted for most of the 1990s into early 2001, during which we saw average job growth at 2.0% per year and economic growth averaging at 3.6% and the economic recovery under President Reagan and Bush 41 which saw average job growth of 2.8% and economic growth at 4.3% per year. Indeed, the current recovery is the second weakest in American history in terms of both jobs and economic growth, with only the recovery that took place from 1945-1948 in the wake of World War Two having been weaker. (The source for all the statistics in this paragraph can be found here.)

What these numbers suggest, of course, is that it would not take much for the economy to slip into recession, or at least to slow down to a point where it would be stagnant and the average American would begin to feel the impact of such a downturn. In all honesty, it is inevitable that this is going to happen at some point. Economic expansions don’t last forever, and the longer we go without a downturn the more likely it is that there is one around the corner. The only question is when it’s going to happen, and whether the timing comes at a time that undercuts what is effectively the President’s only argument for re-election. If it does, then it may not matter who the Democratic nominee turns out to be. While even a bad economy most likely won’t break the faith of the diehard Trump supporters, it’s likely to have a real impact on many of the white working-class voters who supported Trump over Clinton in 2016 and had previously supported former President Obama. So keep an eye on the economy, because it could give us a big clue on which way the election will go.

Most economists believe the United States will tip into recession by 2021, a new survey shows, despite White House insistence the economy is sound.

Update: On a related note, The Washington Post reports that a majority of economists are predicting a recession in the next 12 to 24 months:

Most economists believe the United States will tip into recession by 2021, a new survey shows, despite White House insistence the economy is sound.

Nearly 3 out of 4 economists surveyed by the National Association for Business Economics expect a recession by 2021, according to results released Monday. The outlook reflects growing skepticism among economists and investors that the U.S. economy will be able to withstand a protracted trade war with China without serious harm amid the weakening global outlook.

Hedge fund manager Ray Dalio, the founder of Bridgewater Associates, told CNBC last week that he now believes there’s a 40 percent chance of a recession before the 2020 election. In February, he had estimated that figure to be 35 percent.

Stock markets gyrated last week as investors grappled with continuing U.S.-China trade uncertainty and absorbed grim data showing Germany and eight other major economies are in a recession or on the verge of one. And Wednesday, the bond markets sounded their own warning when the yields on 10-year Treasury bonds briefly fell below those on two-year Treasury bonds. The scenario, known as an inverted yield curve, has preceded every recession since 1955 and offers a sign that investors are piling into safer assets.

(…)

Some businesses have scaled back their investments as they wait for a resolution to the trade war. The manufacturing industry is struggling as output declines and hiring contracts.

The Federal Reserve also is working to shield the U.S. economy, cutting interest rates last month for the first time since 2008. Fed Chair Jerome H. Powell called the move a “midcycle adjustment” and said that it was not necessarily the start of a long rate-cutting trend. However, expectations for further rate cuts are on the rise, with investors now pricing in another rate reduction during the Fed’s September meeting.

The survey of 226 economists was conducted from July 14 to Aug. 1, before Trump announced the latest round of tariffs against China and before the last bout of market volatility. Still, the report found that economists were nearly as pessimistic about the United States this summer as they were earlier this year, showing that for many economists the question is not so much whether the U.S. economy will enter a recession but when.

Some economists delayed the timeline for when they expect a slowdown to start. The share of economists expecting a recession this year dropped to 2 percent from 10 percent in February. In addition, 34 percent now expect a recession in 2021, up from 25 percent in February. Still, about 4 out of 10 economists expect a slowdown in 2020, roughly unchanged from the previous report.

It’s not a question of if there will be a recession, it’s a question of when it will happen.

FILED UNDER: Donald Trump, Economics and Business, Politicians, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Teve says:

    Kurt Andersen
    @KBAndersen

    NBC/WSJ poll, 52% say they’ll definitely/probably for the Democratic nominee, 40% definitely/probably for Trump. No surprise.

    But the gender gap among less educated white people is remarkable:

    White non-college women
    Dem 49% Trump 43%

    White non-college men
    Trump 67% Dem 22%

  2. Sleeping Dog says:

    A couple of factors that have contributed to the length of this recovery are the fact that the rate of growth has been so incremental and the reality there is lots of cash carried on corporate balance sheets and the retirement accounts of baby boomers.

    If the economy was growing rapidly, we would have likely seen increases in wages and followed that by prices, which would have had the Fed raising interest rates out of fear of inflation. With so much cash in the economy, interest rates have been kept low due to low demand for borrowing and the Federal government had slowly reduced it’s deficit spending further shrinking borrowing.

    But all good things come to an end and the signs of a weakening economy are prevalent. Reports in the last couple of weeks in weakness in housing, dropping home ownership levels and a steep fall in auto sales.

    In truth irrespective of the earlier increase in rates by the Fed, historically interest rates are very low and when the recession comes, the Fed doesn’t have a lot of flexibility to fight it. And Tiny’s budget deficits will make a Keynesian stimulus extremely difficult.

  3. Kathy says:

    El Cheeto’s been trying to wreck the economy from day one, with tariffs and immigration restrictions, thus depriving the markets of goods, raw materials, and labor in varying degrees. The big tax cut as stimulus didn’t help, either, as it makes further stimulus when it is needed far less likely.

    He’s been saved, in part, by inertia. You can’t just derail an economy with a few terrible policies. Not all at once. it takes time.

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  4. Kit says:

    A CNN poll from late May found that 26% of those who approve of Trump’s job performance said it was mainly because of the economy.

    Color me sceptical. We’ve supposed to believe that these 26% have been so focused on the economy that the never ending shit show of a presidency has never cooled their enthusiasm? Trump’s base really isn’t in the low 40’s but rather in the low 30’s (plus 10% who really care about the economy)? I guess these were previously Obama men, having overwhelmingly voted for him in repudiation of Bush’s economic collapse). Well, I wouldn’t worry about these guys: after they finally finish crunching the numbers on the tax cuts, budget deficits, and trade war, they will see the light. Well, unless they’re white nationalists who lie when answering surveys.

  5. michael reynolds says:

    I doubt a recession will hurt Trump’s top line number much. He’s been nailed to 42% support for a year. That kind of stability isn’t about policy, it’s tribalism. He is the candidate of white losers, and the secret of losers is that they never really expect to stop being losers. They just need other people to be bigger losers. If recession comes and the Trumpaloons see lines of black people at the unemployment office, they’ll be just fine. If they, for whatever reason, see themselves as primary victims they will accept whatever scapegoat Trump nominates for the Two-minutes hate.

    Bottom line: I expect Trump will go into the election with about 40% regardless of the state of the economy. The change, I suspect, won’t be in that top line number but in intensity and thus turn-out. A recession might help motivate Democrats. But people don’t respond to headlines, they respond to their own experience and there simply is not enough time left for a recession to have much impact on the ground.

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  6. Slugger says:

    I am bullish on the American economy. It has grown very nicely for the past 150 years, and I believe that this will continue. However, the growth of this economy, or any other economy on earth, has not been smooth and even. There are times when it has been slow, even negative, and times of rapid expansion. Boom and bust with an overall positive trend in the long run. Recessions recur every seven to ten years. Economists have not been very successful in predicting these events, and their explanations are glib but again have not led to useful predictions. This is true of all stripes of economists, right or left, academic or Wall Street. Do economists predict better than astrologers? I’d love to see proof.
    During the great downturn of 2006-2009, the people nominally in charge seemed very worried, but they were not active during the prodrome of 2000-2006 when some action might have helped.
    Trump does not have economic advisers. He has sycophants telling him what he wants. This leads to the possibility of doing something stupid when the inevitable happens.

  7. Kylopod says:

    There already is a Trump recession no matter how much he tries to hide it.

  8. Kylopod says:

    @michael reynolds:

    I doubt a recession will hurt Trump’s top line number much. He’s been nailed to 42% support for a year. That kind of stability isn’t about policy, it’s tribalism.

    The economy is essentially what has kept him aloft all this time. He’s very unpopular relative to the economy. It’s true he has maintained a certain floor throughout his presidency–roughly 42% as you mention–but occasionally it has dipped below this floor in response to events, such as the government shutdown earlier this year, only to rebound after the event in question passes. But that doesn’t mean all the people who currently support him will go on continuing supporting him indefinitely, no matter what happens. Some of it’s still soft support. You can see the difference in polls that distinguish between those who “strongly approve” of the president versus those who “somewhat” approve. The “somewhat approve” crowd has a much more transactional relationship with the president, they could well turn on him if things go sour in the country, and it’s very possible that for many in this category, the economy is the main or sole reason they approve of him at all.

    One of the most common fallacies political junkies make is thinking most of the public is as engaged in the day-to-day of politics as they are. A lot of people are just living their lives, and the things you and I consider massively important may be in the background, the rearview mirror, or not in sight at all. You can argue that Trump is so obviously repugnant that anyone who gives him positive ratings must be mindlessly tribalistic. That may be, but it doesn’t mean every single one of them is a hardcore MAGA cultist. Probably a certain number are people who figure things are more or less “acceptable” right now, and therefore are willing to give Trump the benefit of the doubt. Even if it’s just 5% of the public, that alone could be devastating to his reelection chances should they decide to abandon him.

    A downturn in the economy would also be devastating to people’s motivations for voting for Trump. I surmise that the true percentage of people who would be rushing to the polls to support him no matter what happens, even if their own bank accounts are collapsing, is a lot lower than 42%. A downturn would certainly depress his soft support and might even start to eat into what we think of as his hardcore base, and meanwhile would heavily motivate non-supporters to get off their butts and do something about it.

  9. Kit says:

    @Kylopod:

    I surmise that the true percentage of people who would be rushing to the polls to support him no matter what happens, even if their own bank accounts are collapsing, is a lot lower than 42%.

    McCain received 45% of the vote while Bush’s economy was in meltdown.

  10. gVOR08 says:

    @Kit: Yeah, but the other guy was Black, which probably boosted McCain 2 or 3 points. Of course this time the other guy may well be a woman, which likely cost Hillary 2 points.

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  11. Kylopod says:

    @Kit:

    McCain received 45% of the vote while Bush’s economy was in meltdown.

    Heck, even Herbert Hoover got about 40% at the height of the Great Depression. My point wasn’t that Trump’s total vote would sink below this percentage in the event of an economic downturn–that’s extremely unlikely–but that his approval ratings likely would, and it would eat into his current support and depress turnout on his side.

    There’s never a perfect one-to-one correspondence between approval and vote percentage. Carter’s ratings in Nov. 1980 were around 31%, but he got well above that in terms of share of the popular vote, even while losing in a landslide. For that matter, if the economy stays above-board into 2020 and Trump continues with his dismal ~42% approval ratings, it’s unlikely he’d get as low as 42% in the popular vote; very likely it would be higher and he could well win, at least electorally. What we can say is if his ratings sink below their ~42%, not just temporarily but persistently, he’d be in big trouble electorally.

  12. michael reynolds says:

    @Kylopod:
    What is ‘the economy?’ To most people it’s ‘do I have a job?’ A recession is not likely to knock enough people out of their jobs to have much real-world political impact, not in the next 14 months, not unless it’s another 2008.

    I don’t think any significant amount of Trump’s support is about the economy. I think that’s what people tell themselves, but I don’t think it’s true, not any more. His base is white people afraid of being no better off than black people and immigrants. They’re scared of ‘losing’ their country, by which they mean their unacknowledged privilege. An economic set-back can be waved away as being caused by the mainstream media and a host of ‘others.’

    That said, I’m optimistic we’ll win, because as much as that 42% is rock-steady, so is the 53% opposition. I suspect simple fatigue will be a major factor – even some MAGAts may be tired of Trump’s act. He has no second act, it’s just the same show, over and over and over.

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  13. Daryl and his brother Darryl says:

    It can also be seen in the comments by one of Trump’s chief economic advisers, Larry Kudlow,

    ROTFLMAO
    Kudlow in December 07:

    “There’s no recession coming. The pessimistas were wrong. It’s not going to happen. . . . The Bush boom is alive and well. It’s finishing up it sixth consecutive year with more to come.”

    Kudlow in January 08:

    “[B]anks are taking significant steps to repair their balance sheets. Even though some people might not be happy with the speed, the reality is things are improving.”

    Kudlow in February 08:

    “I’m going to bet that the economy will be rebounding sometime this summer, if not sooner. We are in a slow patch. That’s all. It’s nothing to get up in arms about.”

    Then in April of 08, Kudlow pens this gem – “The Therapeutic Power of Recession”:
    https://www.cnbc.com/id/23995123
    Why in the world would anyone, with even half a brain, listen to anything Larry Kudlow says?

  14. gVOR08 says:

    @Kylopod:

    One of the most common fallacies political junkies make is thinking most of the public is as engaged in the day-to-day of politics as they are. … You can argue that Trump is so obviously repugnant that anyone who gives him positive ratings must be mindlessly tribalistic. That may be, but it doesn’t mean every single one of them is a hardcore MAGA cultist.

    This touches on two other fallacies I think are relevant.

    One of the basics in Econ 101 is that economics happens at the margin. It’s not the average price of corn that matters, it’s the price of the last bushel sold that matters. Politics also happens at the margins. We talk about the average Trump voter, but all that matters are the one or two or ten percent who can be persuaded to switch or stay home.

    The other fallacy is that the easiest vote to get is the last one you lost. I hear so much about how to get back the Obama-Trump voters. But it probably makes more sense to go after the educated suburban habitual Republicans.

  15. Kylopod says:

    @michael reynolds:

    His base is white people afraid of being no better off than black people and immigrants.

    I wasn’t talking about his base, I was talking about his soft supporters. I think you underestimate how much of his current support is “soft.” You imagine that his current approval is almost entirely composed of MAGA-hatted, lock-her-up-chanting, take-back-the-country crowd. Let’s put it this way: even if 95% is in that category–which I seriously doubt–losing just that 5% who aren’t would damage his reelection prospects, probably fatally.

    I’m not at all optimistic that he’ll lose if the economy continues to grow. But I don’t think a whole lot would have to change for the bottom to fall out from under him.

  16. Kylopod says:

    @gVOR08: Very good points.

  17. Daryl and his brother Darryl says:

    @Daryl and his brother Darryl:

    Why in the world would anyone, with even half a brain, listen to anything Larry Kudlow says?

    Indeed, the biggest indicator of an oncoming recession is that Larry Kudlow says there won’t be one.

  18. Kylopod says:

    @Daryl and his brother Darryl:

    Indeed, the biggest indicator of an oncoming recession is that Larry Kudlow says there won’t be one.

    He’s the Dick Morris of economists.

  19. michael reynolds says:

    @Kylopod:
    I agree that there’s a fringe of persuadables. They aren’t actually necessary for us to win, though obviously every little bit helps. I just read that a third of economists think we’ll go into recession in 2021, too late to be of any help.

    But this has never been about the economy. The economy today is the same economy we had under Obama, aside from tax cuts for rich people, it’s pretty much a straight line. People didn’t vote for Trump because of the economy, that’s just the easy answer to give a pollster, the acceptable answer. This has always been about fear, and not fear of unemployment. This is a historic inflection point. A huge amount of societal change coinciding with what will be seen in retrospect as the divisive and corrosive effects of social media, all over a very short period of time = a bunch of scared people who don’t think they can keep up. Scared, confused people want to be fed simple answers, regardless of whether or not the answers have anything to do with reality.

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  20. gVOR08 says:

    The government publishes six measures of unemployment, U1 – U6. The headline unemployment rate is U3, basically people without a job and actively looking for one. U6 is the broadest measure, more or less U3 plus people who are part time and could go full time and unemployed who aren’t really looking for a job, but might if something good came up. I’m retired. If I came across something interesting I might take it.

    The headline rate has been low, but hasn’t been driving up wages because there’s been a gap between U3 and U6 and more people keep entering the job market. Kevin Drum posted a chart of U6 v job openings. They are rapidly converging. We may be close to a point that employers finally have trouble getting new people. This bids up wages as a shortage of labor drives up the cost of labor. Rather than seeing this as supply and demand, the FED sees OMG INFLATION and raises interest rates to slow the economy. Then they overshoot and cause a recession.

    My point being that yes, thar’s a recession acomin’, but the timing is bad. The above will take longer than 15 months. Also, too, the FED has signaled that they will, once again, keep rates down to support a Republican incumbent. We can’t count on recession to take out Trump. We’ll have to do it the hard way.

    On the other hand (it’s econ, there’s always an on the other hand) the trade war stuff could do the job faster. Even if Trump backs off tariffs, he’s generating huge uncertainty.

  21. gVOR08 says:

    @Kylopod: How does Bill Kristol feel about the economy?

  22. grumpy realist says:

    Also don’t forget the impact of a no-deal Brexit, if the U.K. goes out Oct 31st as BoJo keeps shrieking about. I expect a nice set of financial reverberations and shocks to the world’s financial markets, especially if the pound slithers down another 20% or so.

    (Supposedly the US is going to rescue the U.K. with a big fat whopping trade agreement but my money’s on Trump’s shark tendencies: even when he knows full well it’s better in the long term to have a win-win situation he will go ahead and screw the other side, simply because he can. So bye-bye NHS, bye-bye labels on food showing country of origin, hello US having veto power over any foreign agreements the U.K. signs with China, hello use of US law courts in any litigation with a US exporter….and it’s not going to be done by Oct. 31sth, either.)

  23. Kylopod says:

    @michael reynolds: It may be possible to win without any of the Trumpist vote, just by turnout alone (and by avoiding third-party defections). But I feel we can’t afford to close off any avenue of support. There’s a good chance of the election being a nailbiter, and even if it isn’t we need to act as though it is–especially when you factor in voter-suppression, Russian interference, and the GOP’s current EC advantage. According to CNN’s exit polls, 10-15% of Trump voters in 2018 supported Democratic candidates for Senate or governor in states like PA, WI, MA, IA, and AZ. Some of the victories might not have happened if not for such voters.

    I’m not calling for a strategy of trying to “chase” Republican votes. Turnout on our side should be the primary goal. But there is still more potential for shaving off the edges of the Trumpist vote than I think you are giving credit, and it may be crucial, depending on how things shake up next year.

  24. Daryl and his brother Darryl says:
  25. Kit says:

    @gVOR08:

    My point being that yes, thar’s a recession acomin’, but the timing is bad.

    I wonder if inheriting a recession does the D’s any good at all.

  26. Kylopod says:

    @Kit:

    I wonder if inheriting a recession does the D’s any good at all.

    If there’s going to be a recession, I’d rather it come earlier than later. If the economy remains above-board through 2020 and a Dem manages to defeat Trump anyway, and then the recession strikes on the Dem’s watch, the Dem will most likely take the blame from the general public. Long term, Republicans could well end up in full control of government again by 2025.

    If, on the other hand, a recession strikes by next year and Trump is defeated, it might be a problem for the new Dem president (just as Obama was hurt in the 2010 midterms from the ongoing economic crisis he inherited from Bush), but it would be harder for Republicans to pin the blame on Dems, no matter how much they may try. Obviously it would depend on how long and persistent it is, and how much success the Dem has passing measures to combat it (which itself may depend on whether Dems control the Senate–something that’s likelier to occur if the recession strikes by next year). Either way, the earlier it occurs, the earlier it is likely to pass.

  27. gVOR08 says:

    @Kit: FDR benefitted from the Depression starting early enough in Hoover’s term that there was no question which party owned it. Inheriting a recession didn’t seem to help Obama, although it got him elected in the first place. People second guess McCain, but I don’t think any R could have won in ‘08. A lot of people seemed to associate the Recession with Obama. Cum hoc ergo propter hoc. Moscow Mitch was right that not allowing more fiscal stimulus hurt Obama and did have a fair chance of limiting Obama to one term. A complete asshole and a traitor, but right on the politics.

    On the other hand, having his recession early helped Reagan no end. It put off the next recession onto HW, which killed any chance of his reelection. It also created the myth of the Miracle of Reaganomics. Note that Reagan’s recession was a normal, well extreme actually, interest rate recession. We recovered normally once the Fed eased. Obama inherited a balance sheet recession, which typically has a long, shallow recovery. L shaped v V shaped in Krugman’s terminology.

  28. Kylopod says:

    @gVOR08:

    Inheriting a recession didn’t seem to help Obama

    I disagree. While it hurt him in 2010, it helped him get reelected in 2012. Part of that, of course, was that the economy had largely recovered by 2012. But I don’t think he would have won reelection under the same economic conditions if the recession had struck on his watch. Polls showed that the public overwhelmingly blamed Bush for the recession. That didn’t mean voters gave Obama a total pass on ongoing economic problems, but they didn’t view him as the root cause. That mattered.

  29. Just nutha ignint cracker says:

    @Kylopod: It’s pictures like that one that argue against Trump getting spray tans. Normally, people in spray tan booths have their hair pulled back and netted so that the tan spray doesn’t get on it. He must be using a tanning bed.

  30. Just nutha ignint cracker says:

    @Kylopod: Still, it might be okay if the GOP won control of Congress in 2022. After all, Trump is the driving force behind 100% of what’s bad about the Republican agenda (at least that’s the current story), and the President won’t be black this time. A new era of bipartisanship may be on the horizon and we just don’t know it.

  31. Kylopod says:

    @Just nutha ignint cracker: That will only be true if we elect Biden, because as we know all the other Dems are purity-obsessed lefties who don’t know how to reach across the aisle.

    /s

  32. An Interested Party says:

    This has always been about fear, and not fear of unemployment. This is a historic inflection point. A huge amount of societal change coinciding with what will be seen in retrospect as the divisive and corrosive effects of social media, all over a very short period of time = a bunch of scared people who don’t think they can keep up. Scared, confused people want to be fed simple answers, regardless of whether or not the answers have anything to do with reality.

    Sounds like a good pitch for the eventual Democratic nominee…do you want a country of fear or a country of hope…

  33. Just nutha ignint cracker says:

    @Kylopod: Well sure, but other than that

    @An Interested Party: I thought Sarah Palin settled that question back in 2009 or 1o when she said “how’s that hopey, changey thing workin’ out for ya?”

  34. An Interested Party says:

    I thought Sarah Palin settled that question back in 2009 or 1o when she said “how’s that hopey, changey thing workin’ out for ya?”

    Well, her idiocy did help Obama to get elected in the first place…

  35. Kari Q says:

    @gVOR08:

    In 2016 I heard Bill Kristol predict Hillary was going to win and thought “Oh, crap.” That’s when I knew how much trouble she was in.