President Trump has an invincibility cloak. It’s the U.S. economy.
The economy has performed so well under Trump that it has shielded him from what might otherwise be devastating political consequences of a protectionist trade policy that’s hurting farmers, a foolish government shutdown, a white-whale border wall obsession and numerous ethical scandals.
But a fissure has now formed in that shield. Employers generated just 20,000 new jobs in February, far below expectations of around 180,000 new jobs. Before February, job creation since the beginning of 2017 averaged 204,000 per month. The first two years of President Trump’s term represented the strongest job growth since the late 1990s.
The February numbers could turn out to be an anomaly, but they mesh with other data showing the economy is slowing, perhaps considerably. For this reason, this week’s Trump-o-meter reads WEAK, our third lowest rating.
Economists pointed out there was some good news in the disappointing report. Earnings jumped to 3.4% on an annualized basis, the strongest wage growth since 2009, when a deep recession caused millions of layoffs that soon crushed family incomes. And the unemployment rate fell a tenth of a point to 3.8%, which is historically low.
Still, it’s starting to seem clear that Trump will face a weaker economy in the second half of his term than in the first. The economy grew 3.1% in 2018, but the New York Federal Reserve estimates the annual GDP growth rate at just 1.4% in the first quarter of 2019. The economy got a boost last year from the Trump tax cuts and a jump in federal spending. That stimulus is on the wane. Many economists foresee growth of just 2% or so in 2019. In the latest survey by the National Association for Business Economics, nearly half of economists think a recession is likely by 2020.
Trump’s approval rating has never eclipsed 50%, which is unusual for a president overseeing such a healthy economy. Bill Clinton’s approval rating in the late 1990s, when the unemployment rate was at similar low levels, was in the 60s. It stayed there even after the House of Representative impeached him for lying under oath.
Trump’s approval rating among Republicans is around 90%, which suggests he has a strong shot at reelection. But Republicans only represent about 30% of all voters, and some of them back Trump only because they think he’s good for the economy.
Analysis of Trump voters by Emily Ekins of the Cato Institute has found that perhaps two-thirds of Trump backers are ideologically unshakeable fans likely to stick with him no matter what. The other one-third link their support for Trump with a strong economy. So if the economy falters, Trump’s overall approval rating could easily fall into the 30s, imperiling his reelection odds.
There are upsides to slowing job growth. It would support the current pause in Federal Reserve interest rate hikes and possibly even lead to rate cuts, if the job market weakens. That’s often good for stocks. And if the economy is more vulnerable to shocks, it will raise pressure on Trump to resolve his trade dispute with China and stop threatening tariffs on automotive imports. He might even remove tariffs on imports he imposed last year, as a kind of presidential stimulus. At some point, the economy will need it.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman