Over the summer, we saw reports of early warning signs for an economic slowdown in the US. The warning lights aren’t just flashing for the US: Germany is on the brink of a recession; Brexit looms over the British economy; and even China’s economic growth is starting to slow. So, is the US next?
Currently, the US economy continues to remain strong with low unemployment and consumer confidence still high. It’s worth noting that for all the consternation and partisan battles over immigration and healthcare, it’s the economy that matters to voters between the coasts, and voters could sour on President Trump’s handling of the economy.
Historically, if the economy is not in recession, the incumbent party wins the presidency, with one exception (President Calvin Coolidge in 1924). If this trend continues, it’s good news for President Trump. But should a recession hit the US, the president’s re-election campaign is ready to divert the blame elsewhere.
Let’s Play the Blame Game
The President is a master messenger, repeating the same lines over and over again until his supporters regurgitate his words verbatim. Not to mention that the president’s words and tweets get wall-to-wall coverage on every major news outlet. It becomes nearly impossible for his opponents – including the presidential candidates – to get their own message out to the voters…even if the president is caught in a lie.
When it comes to the economy, it’s about whose economic message the voters believe. Trump has outlined a growing list of scapegoats to point to if the US economy does go into a recession before election day:
- Jerome Powell and the Federal Reserve: Trump has taken this message against the Fed to heart, blaming Powell and the rest of the Federal Reserve for instability in the stock markets and slowing economic growth. Or to put it in Trump’s own words – “who is the bigger enemy: Jerome Powell or Chairman Xi?”
- China: Speaking of Chairman Xi – Trump is, of course, blaming the Chinese for slowing down the US economy. Since he launched his presidential campaign in 2015, Trump has said that China has taken advantage of the US. This is one of his greatest hits that he will play over and over again.
- The media: Trump routinely attacks the media on charges of ‘fake news’, but he has recently taken to lambasting the press for ‘talking up a recession’. Conversely, the media is worried about understating the risks of an economic downturn and is perhaps over-correcting for past mistakes.
So, what do the Democrats say? They will probably argue that Trump inherited a strong economy from President Obama and is running it into the ground with his tax cuts, trade wars, and his tweets. To win the economic argument Democrats will likely point to three key actions the president has taken:
- The tax cut: Democrats will say Trump gave a trillion-dollar tax cut to billionaires and corporations. The result, a record deficit, that restricts Democrats’ ability to implement their own policy proposals, some of which carry hefty price tags.
- The trade war: The trade war with China has hurt manufacturing, farmers and American consumers. Democrats will be wary of appearing to cave to China, but the ongoing trade wars allows them to show that prices on everyday goods is increasing because of his spat with the Chinese.
- Tweets: Trump routinely takes to Twitter to announce tariffs against countries or attacks Federal Reserve Chairman Jay Powell to offer his own thoughts on what the Fed should be doing. This rattles markets that expect clarity and consistency from the president. Arguing for more conventional leadership could help Democrats make inroads in the suburbs among more fiscally conservative voters.
Trump’s re-election could boil down to the economy. For all the noise over Trump’s conduct and questions of electability, economic security is what determines voter outcomes. If the jobs market remains robust and growth is solid, Democrats will struggle to make a strong case for why they are a better choice. In 1980, President Ronald Reagan asked, “are you better off now than you were four years ago?” and he defeated President Jimmy Carter (who incidentally endured a recession in the last two years of his presidency). Any economic slowdown will be painful; costing people their jobs and savings. For Trump, the stakes are higher, it could cost him his presidency.