U.S. President Donald Trump listens during a trade meeting with Liu He, China's vice premier, not pictured, in the Oval Office of the White House on Feb. 22, 2019. (Al Drago/Bloomberg).
President Trump is counting on a strong economy to propel him to re-election in 2020, but his signature issue now looks dicey. The economy is slowing down. Manufacturing is in a recession, bankruptcies are rising in farm country and the trade war is starting to bite businesses and consumers.
Democratic presidential hopefuls are openly attacking Trump on the economy, something that seemed almost inconceivable a few months ago. But they have yet to find a zinger as effective as what they used during last year’s mid-term when Democrats characterized the GOP tax cut as tiled heavily toward the rich.
It’s clear Trump will have problems if the economy dives into a recession before Election Day. Any president would struggle in those circumstances -- just ask George H.W. Bush who faced an ill-timed recession in the middle of his first term and failed to win re-election. But a recession is not the most likely outcome in 2020, according to most economists.
[The Trump vs. Obama economy — in 15 charts]
Most forecasters predict a trickier situation: The U.S. economy is likely to slow from nearly 3 percent growth last year to about 1.5 to 2 percent growth in 2020, which is about the same pace as at the end of the Obama Administration. It will be even harder for Trump to keep claiming the economy is the “greatest in history” when it’s growing at a pace he used to slam as weak and “broken.”
“The White House is thinking a lot about June of 2020. If growth deteriorates below 1.8 or 1.9 percent, Trump is vulnerable because it looks worse than Obama,” said Doug Holtz-Eakin, president of the American Action Forum and a former top economic adviser to McCain’s presidential team in 2008. “That is the concern, but we aren’t there right now.”
If the election were held today, Trump would be able to campaign on stocks near record highs, unemployment at near a 50-year low, abundant job openings and rising wages. While the nation still has pockets of pain, especially in some blue-collar steel and manufacturing communities that Trump promised to revive, experts say the economy remains pretty healthy and consumer confidence is still high.
The problem for Trump is that economic outlook is cloudier. American businesses have already pulled back on spending as they worry about on end in sight to Trump’s trade war. Business leaders say Trump’s unpredictable behavior -- such as threatening to close the U.S. border with Mexico -- leave them on edge and make it nearly impossible to plan for the future.
The big fear is that companies have already axed spending and their next move could be axing employees. Layoffs and stock market drops have historically triggered consumers to close their wallets. Once that happens, the economy can head south quickly since 70 percent of the economy comes from consumer spending.
[U.S. businesses are taking down job listings as Trump’s trade war grows]
“Trump should do well on the economy, but he is his own worst enemy in terms of generating uncertainty,” said Greg Valliere, chief U.S. strategist at AGF Investments and author of a morning newsletter on politics and the economy.
Democrats hear growing frustration with Trump’s trade policies. While Americans largely agree with Trump that the United States needs to push China to be a better trading partner, only 35 percent of adults approval of Trump’s handling of trade negotiations with China, according to a Washington Post-ABC News poll taken this month. Fifty-six percent of American adults disapprove.
“The president clearly has no strategy,” said Pete Buttigieg, the mayor of South Bend, Indiana, in the most recent Democratic presidential debate. “I’d like to see him making a deal with [Chinese president] Xi Jinping. Is it just me, or was that supposed to happen in, like, April?”
Strategists say the more that Democrats can hold up trade as another example of Trump’s unpredictable -- and economically harmful -- behavior, the more their attacks will likely resonate.
“This election will be about one of two things: Issues like the economy where Trump will likely do well or Trump himself, where he probably won’t do well,” Valliere said.
But many experts also pointed out that while Buttigieg landed a catchy line on trade, few if any of the Democratic candidates articulated a clear strategy on how to deal with China. Some even said they would keep Trump’s tariffs in place if they won the election.
“Some of these answers are a little word saladish on China and trade, like just throw a bunch of words out there that are generally in the issue area,” tweeted Jen Psaki, former White House Communications Director for Obama.
For his part, Trump has been sharpening his counter-punches on the economy. In addition to his oft-used lines about how great the economy is right now, he is increasingly telling voters that economic doomsday will come if a Democrat wins. It appears to be a subtle shift from telling voters that he can keep the economy great to telling voters that he’ll do better than the competition.
"The Trump Economy is setting records, and has a long way up to go....However, if anyone but me takes over in 2020 (I know the competition very well), there will be a Market Crash the likes of which has not been seen before!” Trump tweeted in June.
He rolled out that line again at a rally in New Hampshire in mid-August: “Let me tell you, if for some reason I wouldn’t have won the election, these markets would have crashed. That’ll happen even more so in 2020.”
Trump has also set up Federal Reserve Chair Jerome H. Powell to blame if the economy falters next year, although few Americans know who Powell is. Valliere says when he travels the country, one of the top questions he gets asked is what exactly Trump is talking about regarding the Fed.
Democratic strategists and economists say they are looking for a line of attack similar to the highly successful one in the 2018 mid-term election that cast the GOP tax cut as a give away to the rich. While most Americans did receive a tax cut, many did not notice and Democrats were able to capitalize on that.
This time around Democratic economists are urging candidates to push Trump on unaffordable health care, child care, rent and college tuition. The number of Americans who lack health care insurance rose in 2018, the first increase since the Affordable Care Act passed in 2010, the Census Bureau recently reported.
“Democrats absolutely can make the case that on things that are critical to people’s economic lives — college tuition, child care issues and health care — Trump is not only doing nothing but working against them,” said Gene Sperling, director of the National Economic Council under Obama and Clinton.
The race is on to see which side can hone its message better -- and whether Trump can boost the economy by striking some sort of deal with the Chinese before 2020, which most economists say would help keep growth and hiring in a better place.
Related:
More Americans go without health coverage despite strong economy, Census Bureau finds
The Trump vs. Obama economy — in 15 charts
Trump delays increase in tariffs on Chinese goods by two weeks ‘as a gesture of good will’
2019-09-17 10:04:44Z
https://www.washingtonpost.com/business/2019/09/17/trump-is-handing-democrats-an-opening-economy/
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