Fast Rebound?
Economy might just save Trump in November
CONVENTIONAL wisdom among corporate executives who lean left is that Joe Biden will be our next president, and they’ve begun eying various posts in the new administration that they or their friends would want to fill.
But they’re forgetting one big obstacle to their path to power: the economy.
That’s right, the economy. Yes, our economy appears to be in really bad shape and is working horribly for many Americans, particularly those in the hospitality, travel and restaurant industries hardest hit by the coronavirus shutdowns. The racial unrest and looting of neighborhoods across the nation didn’t help. Small businesses — the engines of our growth — suffered badly.
But there is significant light to be seen at the economic tunnel’s end for many Americans, according to some Wall Streeters who get paid to bet on all things economic. They tell me many jobs will be lost for a while and maybe forever in those sectors hardest hit. The economy will transition to something different in the near future and maybe longer: More people working from home will mean less money flowing to all sorts of businesses that serviced the office economy.
Plus, unemployment will remain high — a lot higher than the pre-pandemic 3.5 percent. And that could last for years.
And yet, as the pandemic shutdowns end, plenty of measures show that the US economy is on a positive trajectory. Jobs are being created now; businesses are adapting; a deep recession that was the result of the lockdowns is receding, as well.
The positive outlook goes beyond the recent surprise dip in unemployment in May to 13.3 percent from 14.7 percent in April. On Monday, Jay Bryson, chief economist at Wells Fargo, gave a private briefing to executives at BlackRock, the world’s largest money manager, and made the following points, I am told: The deep pandemic recession (or depression) likely ended in April or May, even if the rebound won’t be seen in the numbers for months.
He called the pandemic downturn the “shortest and deepest” on record and said unemployment could fall below double digits to 9 percent by the end of the year, and 6 percent at the end of 2021.
One big reason for the improvement: Politicians on both sides of the aisle don’t have the stomach to mandate another round of massive shutdowns, even if we see spikes in infection rates and a second wave in the fall, he said. Ordinary Americans have had it. They will live with the virus, albeit differently, but they won’t be shut in again.
Another big reason: the economic stimulus plan. It isn’t exactly news to say that President Trump has said some wacky things in recent months, and his uneven leadership certainly has many voters looking for a change. But he has been rocksolid on the economy before the pandemic hit — and after.
The president and his economic team (chiefly Larry Kudlow and Steve Mnuchin) gave us historically low unemployment pre-pandemic. They also gave the economy a fighting chance to survive an economic shock not seen since the Depression.
They did it by doing the exact opposite of what Herbert Hoover and then FDR did (and Joe Biden would do if he’s elected): Instead of raising taxes, Team Trump cut them. Instead of burdening businesses with regulations, Trump continues to push for fewer regs. Instead of engaging in a trade war, Trump has admirably avoided one, particularly with China.
And instead of raising interest rates, as the Fed did following the 1929 crash to clamp down on “speculation,” Fed chief Jay Powell is slashing them left and right, encouraging speculation that has the stock market recovering nearly to the place it was pre-corona.
Trump’s economic plan was far from perfect, to be sure. Small-business loans meant to save restaurants and mom-andpop boutiques were doled out to law firms and financial advisers and other businesses that didn’t need them. Powell, meanwhile, is bailing out companies that were in trouble before the pandemic hit and risking gross market distortions with his hyper-low rates.
Still, economies that are on a rebound tend to continue to rebound for months, and if this rebound is real, it should be producing jobs by the time voters need to decide whom to elect.
The American people have a lot to chew on with Trump. But the economy usually makes or breaks a presidency, and if it continues to improve, Trump has a fighting chance.
Charles Gasparino is a senior correspondent at Fox Business Network.