With less than a year until voters decide whether to hand President Trump a second term in office, the one factor that matters most—the state of the economy—seems likely to favor Trump.
The economic expansion that has already lasted more than 10 years—making it the longest on record—shows no sign of collapsing during the next 12 months. The economy isn’t going gangbusters. Growth is far below the target Trump said he would achieve, 3% or more. But slow and steady may be good enough, especially with jobs plentiful and incomes rising modestly.
The economy is currently growing at 2.1%, solid enough for employers to keep adding jobs. Research firm Oxford Economics predicts that a global growth slowdown will bottom out in the first half of 2020, with business sentiment picking up in the second half of next year. That could mean a burst of business investment follows, just when Trump needs it most.
That would be important, because business spending has unexpectedly flatlined this year. Trump and his supporters argued that the Republican tax cuts passed in 2017 would lead to a spending boom. That hasn’t happened, and voters think the tax cuts favor businesses and the wealthy over the middle class. A pickup in business spending might change a few minds.
Trump’s protectionist trade war with China has hamstrung U.S. manufacturers paying more for Chinese imports, and hurt U.S. farmers subject to retaliatory penalties from China. Yet Trump’s tariffs so far haven’t hurt the economy as much as some forecasters predicted a year ago.
This makes Trump remarkably lucky. He inherited an economy that was gradually improving and continues to improve, even against the current of anti-growth tariffs. Investors view the trade war with China as the greatest threat to global growth, yet stocks have set 33 record highs under Trump.
The Eurasia Group recently predicted Trump would narrowly win reelection if the economy stays as it is. One key factor is a drop in the unemployment rate in 12 of 13 swing states since Trump has been president. While not endorsing Trump’s reelection, the Trump-o-meter notes the favorable outlook for working Americans and points to MEDIOCRE this week, the third-highest rating.
Will Trump’s luck on the economy hold out? Some Democrats undoubtedly hope it won’t, since a recession would probably erode Trump’s weak approval rating enough to bounce him from office. Trump’s approval hovers at an unimpressive 44%, and if it drops into the 30s or lower his presidency would probably be over.
But that doesn’t mean Democrats will automatically lose to Trump in 2020 if the economy continues to chug along. A strong Democratic challenger could highlight issues that still plague many working families, such as the high cost of health care and limited opportunities in many parts of the country. Dems could try to win some rural voters by showing up in farm country, instead of writing off this important voting bloc. And they could coalesce behind a pragmatic, moderate presidential nominee who can win Independent voters and moderate Republicans instead of scaring them off with costly, intrusive government programs. If Trump remains lucky, they won’t.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: firstname.lastname@example.org. Encrypted communication available. Click here to get Rick’s stories by email.