Trump is down but by no means out de­spite the strug­gling econ­omy

The pres­i­dent is be­hind in the polls but con­cern over protests seen in some cities is bol­ster­ing his sup­port

The Daily Telegraph - Business - - Business Comment - ryan bourne Ryan Bourne holds the R Evan Scharf chair for the pub­lic un­der­stand­ing of eco­nom­ics at the Cato In­sti­tute

If you’d re­cently awo­ken from a long coma and were re­view­ing US eco­nomic data, you might pre­sume that Don­ald Trump’s pres­i­den­tial re-elec­tion prospects are au­to­mat­i­cally doomed. A third of Amer­i­can eco­nomic ac­tiv­ity stopped in the sec­ond quar­ter of the year and, even with a par­tial re­bound, GDP is fore­cast to fall by 5pc to 6pc over 2020. The US un­em­ploy­ment rate is above 10pc. The em­ploy­ment rate is down seven per­cent­age points and has fallen by more than dou­ble that for low-wage work­ers. Gov­ern­ment debt is soar­ing, with huge re­lief pack­ages cou­pling with cratered tax rev­enues. The num­ber of small busi­nesses open is down by a fifth on Jan­uary 2020.

If “the econ­omy, stupid” alone de­ter­mined elec­tions, then, Trump would surely be toast in Novem­ber. And yet, while the pres­i­dent is still un­der­dog (cur­rent polls show him trail­ing Demo­cratic nom­i­nee Joe Bi­den by around five or eight per­cent­age points), re­mark­ably, Trump ac­tu­ally leads his op­po­nent by dou­ble-dig­its on polling of who would bet­ter han­dle the econ­omy.

Most agree the pres­i­dent has not done well in deal­ing with the pan­demic. With the coun­try trundling slowly towards the sorts of de­press­ing deaths per pop­u­la­tion fig­ures seen in Spain, Italy, and the UK, an over­whelm­ing ma­jor­ity of Amer­i­cans think its lead­ers have han­dled the cri­sis badly. Many though seem ready to ig­nore the ob­vi­ous link between pub­lic health and good eco­nomic out­comes.

Part of Trump’s lead on eco­nom­ics is due to the econ­omy’s pre-pan­demic strength. Vot­ers re­mem­ber the his­tor­i­cally low un­em­ploy­ment rates, in­clud­ing for black and His­panic pop­u­la­tions. It is more dif­fi­cult to blame the pres­i­dent for a down­turn that was trig­gered by a virus orig­i­nat­ing in China that rocked most economies world­wide. Es­pe­cially be­cause, in many vot­ers’ eyes, Trump was less keen than Democrats on the lock­downs they think ex­ac­er­bated to­day’s prob­lems.

This also ex­plains why many vot­ers might pre­fer Trump on eco­nom­ics. Who do you want to lead you out of a down­turn? The guy who over­saw a boom­ing econ­omy be­fore the virus hit, or an op­po­nent promis­ing huge new spend­ing, higher taxes, and vast gov­ern­ment reg­u­la­tion of labour mar­kets?

For Amer­i­cans, a na­tion with a deeper scep­ti­cism of gov­ern­ment any­way, Demo­cratic claims the econ­omy was a wreck be­fore Covid-19 ring hol­low.

Now Joe Bi­den is no so­cial­ist, how­ever much Trump paints him as one. But Bi­den’s agenda would con­sti­tute a sharp shift Left for eco­nomic pol­icy. The for­mer vice pres­i­dent wants the elec­tion dis­course to be a ref­er­en­dum on Trump’s char­ac­ter and judg­ment, which has seen the pres­i­dent lose sup­port among the high turnout el­derly. But the Repub­li­cans can rightly claim that a big gov­ern­ment eco­nomic agenda lurks be­hind the Demo­crat’s stated fo­cus on “the soul of the na­tion”. By my reck­on­ing, Bi­den’s of­fi­cial man­i­festo would add around five per­cent­age points of GDP to gov­ern­ment spend­ing per year. It would em­bolden unions, stamp down on gig econ­omy work, cre­ate a raft of new wel­fare state pro­grammes, broaden gov­ern­ment pro­vi­sion of health­care and over­haul the en­ergy in­dus­try. Add to that Bi­den’s mus­ings about the pos­si­bil­ity of a na­tional lock­down and there’s enough there for many Amer­i­cans to fear.

Nor is it easy for Democrats to claim Trump has not pro­vided enough eco­nomic re­lief dur­ing the pan­demic.

What­ever you think about the wis­dom (or in­deed le­gal­ity) of the mea­sures, the ad­min­is­tra­tion has not taken a lais­sez-faire ap­proach dur­ing this cri­sis.

They went along with the mas­sive $2.2 tril­lion bill for busi­nesses and house­holds. They re­cently an­nounced (us­ing pub­lic health author­ity) a tem­po­rary halt to evic­tions from rental prop­er­ties. And, with Congress grid­locked, Trump’s ad­min­is­tra­tion uni­lat­er­ally ex­tended el­e­vated un­em­ploy­ment ben­e­fits (al­beit at a lower level than Democrats wanted) as well as a pay­roll tax hol­i­day akin to an em­ploy­ees’ na­tional in­sur­ance cut for most work­ers un­til Jan­uary.

No­body would go so far as claim that the on­go­ing eco­nomic strug­gles are “good” for Trump, ob­vi­ously. But what’s re­mark­able is how lit­tle ev­i­dence there is that the econ­omy is harm­ing him. What ul­ti­mately makes Bi­den the clear favourite still is not Amer­i­cans’ eco­nomic pain, but Trump’s han­dling of the pan­demic and per­sonal con­duct.

Even so, in the past month or so Trump has made up some ground. The Real Clear Pol­i­tics polling av­er­ages show a tight­en­ing through July and Au­gust, as vi­o­lence and protests in Demo­cratic cities has given Trump the op­por­tu­nity to de­clare him­self the “law and or­der” can­di­date.

Covid-19 has rocked dense metropoli­tan ar­eas where pro­fes­sion­als live and spend. The fact rents are down for sin­gle-bed­room apart­ments by 10pc or more in New York, San Fran­cisco, Wash­ing­ton DC, and San Jose, gives an in­di­ca­tor of the eco­nomic car­nage hit­ting cities.

Yet vi­o­lent protests along­side Black Lives Mat­ter and An­tifa ac­tiv­ity in many cities has al­lowed Trump to high­light the role of law­less­ness in mak­ing cities un­pleas­ant places to be right now. The more rad­i­cal el­e­ments on the streets gave the pres­i­dent the chance to re­frame him­self as the de­fender of Amer­i­can val­ues, norms, and or­der, as op­posed to the pres­i­dent who has him­self played fast and loose with the rule of law and ex­ac­er­bated di­vi­sions.

As a re­sult, Trump is still in this race and it is ex­tra­or­di­nary that such a sig­nif­i­cant eco­nomic down­turn ap­pears to be putting so lit­tle drag on his prospects. What’s more, the tim­ing of of­fi­cial statis­tics could give the pres­i­dent a fi­nal, late eco­nomic elec­tion boost too.

One con­se­quence of a sharp con­trac­tion in­duced by vast shut­downs in sec­ond quar­ter will be a large re­bound in the third quar­ter. Though this will be far from a full re­cov­ery, Trump will fea­si­bly be able to say that the quar­ter rep­re­sents the fastest growth on record, just days be­fore polling day.

His nar­ra­tive will then be: why risk the re­cov­ery?

The protests have given Trump the chance to re­frame him­self as the law and or­der can­di­date

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.