If President Trump is reelected in November, much of the credit should go to a strong U.S. economy. Many voters, even if they dislike much of Trump’s behavior, may decide that they don’t want to mess up the economy with a radical change of direction.
In general, presidents receive too much credit (or blame) for the country’s economy, and at least some of the good economic news from Trump’s presidency represents a continuation of trends from the last years of the Obama administration. But Trump still has an impressive story to tell.
A combination of deregulation, loose monetary policy, and even looser fiscal policy has sustained and strengthened a long-running recovery. Economic growth has stayed around 2–3 percent throughout his presidency. Unemployment is at a 50-year low, and unemployment rates for women, African Americans, and Latinos are also at long-term, or even record, lows.
More impressive still, wages are rising, especially for those in the president’s working-class base. Average wage growth for workers now outpaces average wage growth for managers. Wages for those without a bachelor’s degree are actually growing faster than wages for those with a bachelor’s degree or higher. Wage growth for the working poor (individuals in the tenth percentile of incomes) is higher than wage growth for the wealthy (individuals in the 90th percentile). Average wage growth for African Americans is outpacing wage growth for white Americans. And consumer confidence is up: According to an Economist/YouGov poll, fully 30 percent of Americans believe they are “better off than they were a year ago.”
It will be hard for Democrats to sustain a narrative that the economy is some sort of dystopian nightmare if it remains this healthy. And promises of radical change may scare voters, especially suburban swing voters, who dislike Trump but are wary of upsetting the apple cart. Last night’s Democratic debate, with its calls for trillions in new taxes and spending, more regulation on just about everything, and the government takeover of entire industries, may win cheers from the Democratic base but is unlikely to win over people who think the economy is working pretty well for them.
Still, there are enough dark clouds out there to blunt the president’s narrative. The economy may not be as strong as the surface numbers seem to show.
Economic growth is already slowing and, while a recession is unlikely in the near future, the Fed expects it to continue slowing over the rest of the year, perhaps dropping below 2 percent. The increase in manufacturing jobs at the start of the Trump presidency has petered out, to the point where manufacturing employment actually fell by 12,000 jobs in December, and there is a growing weakness in the manufacturing sector more broadly. U.S. commercial and industrial lending fell by $9 billion last month to $2.35 trillion, its biggest month-to-month drop since March 2017. And despite a first-stage trade deal with China, Trump’s hostility to international trade still poses both short- and long-term threats to the economy.
Nor should we ignore the impact of the president’s borrow-and-spend policies on the national debt. Our annual budget deficit has now topped $1 trillion for the first time since 2012. The debt has increased over $3 trillion in Trump’s first term, a truly Obama-like rate. And sooner or later, that bill is going to come due.
In the end, most opinion about the president is already set in concrete. Neither his base nor the Democrats’ is going to be moved by the fluctuations of economic reporting. Perhaps that is why polls show only a weak correlation between voters’ positive feelings about the economy and their approval, or lack thereof, of Trump.
All of which means that if Democrats hope to win this fall, they will have to find a way to reassure voters that they don’t intend to upend the economic gains won on Trump’s watch. And last night’s debate did not provide any evidence that they’re yet up to the task.