It finally happened: The House of Representatives impeached President Trump.
Financial markets couldn’t care less. Consumers remain confident. Businesses are still cautiously optimistic. The economy continues to grow.
The nonreaction to Trump’s impeachment isn’t a surprise. After weeks of testimony regarding Trump’s attempted shakedown of Ukrainian officials, the story is known and the outcome is pretty clear: The Senate will almost certainly acquit Trump, and he’ll continue as president. Even if Trump left office, his replacement, Vice President Mike Pence, would continue most of the Trump policies markets care about.
As impeachment heads toward its denouement, however, the stable economy reveals how much Trump has squandered. If not for his corruption and divisiveness, Trump would be sailing to reelection. Every U.S. incumbent since World War II who has run for reelection with a growing economy has won. Yet Trump is endangered, and according to some polls, he would lose to any of at least four Democrats if the election were held today.
This week’s Trump-o-meter is a split decision. Trump’s impeachment is a tawdry development that warrants a SAD!, the lowest rating. But the economy’s resilience is reassuring, along the lines of BIGLY. That makes the aggregate outcome WEAK, the Trump-o-meter’s third-lowest reading.
Barring unpleasant surprises such as a terrorist event or health emergency, the economy will determine whether voters reelect Trump. And Trump may need better economic performance than any conventional president would need.
Will he get it? For now, it looks like a 50-50 proposition. Working against Trump: Economic growth has slowed from 2.9% in 2018 to around 2.1% now. Forecasters think it will stay near that level throughout 2020, and maybe slow a bit more. Trump campaigned by promising 3% and maybe 4% growth, and he hasn’t achieved that. Worse, many of the gains under Trump have gone to the wealthy, who benefited disproportionately from Trump’s 2017 tax cut law.
Trump’s trade dispute with China is a wild card. If the “phase one” deal results in a meaningful rollback in tariffs and a big boost in U.S. food and energy sales to China, Trump will have a plausible claim to victory. But skepticism surrounds the deal. Trump has misled the public dozens of times about progress with China. It’s not clear China has agreed to the terms Trump says they have. And even if China does agree, barriers to trade between the two countries remain much higher than before Trump started the trade war last year, which will hurt growth. Trump will probably be lucky if the trade war with China doesn’t become an albatross around his neck.
In Trump’s favor: Unemployment remains remarkably low, at 3.5%, and 2% growth is enough to keep it there. The stock market has performed well under Trump, one reason his current grade on the Yahoo Finance Trumponomics Report Card is a solid B+. Consumer confidence is strong and shoppers are comfortable spending money. If nothing bad happens during the next 12 months, many Americans will feel like they’re better off toward the end of Trump’s first term than they were at the beginning.
Impeachment will be a distant memory by then, and the battle between Trump and whoever his Democratic opponent turns out to be will hinge on whether voters are willing to disrupt a status quo that’s working for them, economically. Democrats will argue that sure, the economy’s great for the 1%, but the middle and working class aren’t getting their fair share. Data suggests they’re right. But Trump may seem like the safer bet all the same, even for voters who don’t like or respect him.
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.