Donald Trump won’t have to run his re-election campaign amid a 2020 recession — but numbers now emerging are bad enough, and their shape is bad enough, to show he won’t be running a Morning in America campaign either.
New government data Thursday showed the economy’s gross domestic product grew at a 2.1 per cent annual rate in the fourth quarter — the second straight quarter at that tepid number, closing out the weakest year of Trump’s presidency. Worse, the slowdown is aimed straight at Trump’s base, including a decent-sized manufacturing recession. It’s based directly on the failure of Trump’s policies. And the details belie the idea, popular in Washington, that consumer confidence is high and that such confidence begets confidence in the president.
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Let’s walk through this fairly complicated argument one step at a time.
First, the economy really didn’t do well in the last nine months of 2019, even if the stock market thinks it did.
Thursday’s report marks the third straight quarter where the economy grew at 2.1 per cent or less, since the second quarter of the year saw only 2.0 per cent growth. Forecasts for the first half of 2020 are a little worse: Consulting firm IHS Markit expects first-quarter growth at a 2 per cent annual rate, and High Frequency Economics thinks it could go as low as 1.2 per cent as Boeing attempts to solve its 737 Max safety issues.
“Welcome to 2016, when it was one quarter after another of roughly 2 per cent growth,” said Joel Naroff, president of Naroff Economic Advisors. “We have had three consecutive quarters right about that level. And sifting through the data, there is no reason to think that will change significantly in one direction or the other.’’
The details, though, are nastier than headline numbers. Consumer spending grew only 1.8 per cent annualized, down from 3.2 per cent in the third quarter — which Naroff attributes to slowing income gains. Private investment — investment was supposed to surge because of a 2017 tax cut focused on corporations and small business owners — was down 6.1 per cent. Imports were way down — which propped up short-term growth, given the technical details of how economists measure growth. But exports of manufactured goods were also down.
So Trump’s trade war isn’t bringing manufacturing to the US. It’s just making consumers spend less.
The best ways to look through the statistical gobbledegook of economic data is to zero in on a line called “final sales to domestic purchasers.” That number rose at an annual clip of only 1.6 per cent — excluding sales to the government, it was an even worse 1.4 per cent.
Second, you can trace the weakness exactly to Trump’s policies.
The Democrat challengers to Trump in 2020
Show all 25
The Democrat challengers to Trump in 2020
1/25 Bernie Sanders
The Vermont senator has launched a second bid for president after losing out to Hilary Clinton in the 2016 Democratic primaries. He is running on a similar platform of democratic socialist reform
Getty
2/25 Joe Biden
The former vice president recently faced scrutiny for inappropriate touching of women, but was thought to deal with the criticism well and has since maintained a front runner status in national polling
EPA
3/25 Elizabeth Warren
The Massachusetts senator is a progressive Democrat, and a major supporter of regulating Wall Street
Reuters
4/25 DROPPED OUT: Bill De Blasio
The New York mayor announced his bid on 16 May 2019. He emerged in 2013 as a leading voice in the left wing of his party but struggled to build a national profile and has suffered a number of political setbacks in his time as mayor
AFP/Getty
5/25 Pete Buttigieg
The centrist Indiana mayor and war veteran would be the first openly LGBT+ president in American history
Getty
6/25 Michael Bloomberg
Michael Bloomberg, a late addition to the 2020 race, announced his candidacy after months of speculation in November. He has launched a massive ad-buying campaign and issued an apology for the controversial "stop and frisk" programme that adversely impacted minority communities in New York City when he was mayor
Getty Images
7/25 DROPPED OUT: Beto O'Rourke
The former Texas congressman formally launched his bid for the presidency in March. He ran on a progressive platform, stating that the US is driven by "gross differences in opportunity and outcome"
AP
8/25 Steve Bullock
The Montana governor announced his bid on 14 May. He stated "We need to defeat Donald Trump in 2020 and defeat the corrupt system that lets campaign money drown out the people's voice, so we can finally make good on the promise of a fair shot for everyone." He also highlighted the fact that he won the governor's seat in a red [Republican] state
Reuters
9/25 DROPPED OUT: Cory Booker
The New Jersey Senator has focused on restoring kindness and civility in American politics throughout his campaign, though he has failed to secure the same level of support and fundraising as several other senators running for the White House in 2020
Getty
10/25 DROPPED OUT: Wayne Messam
Mayor of the city of Miramar in the Miami metropolitan area, Wayne Messam said he intended to run on a progressive platform against the "broken" federal government. He favours gun regulations and was a signatory to a letter from some 400 mayors condemning President Trump's withdrawal from the Paris Climate Accord
Vice News
11/25 DROPPED OUT: Kirsten Gillibrand
The New York Senator formally announced her presidential bid in January, saying that “healthcare should be a right, not a privilege”
Getty
12/25 DROPPED OUT: Kamala Harris
The former California attorney general was introduced to the national stage during Jeff Sessions’ testimony. She has endorsed Medicare-for-all and proposed a major tax-credit for the middle class
AFP/Getty
13/25 John Delaney
The Maryland congressman was the first to launch his bid for presidency, making the announcement in 2017
AP
14/25 Tulsi Gabbard
The Hawaii congresswoman announced her candidacy in January, but has faced tough questions on her past comments on LGBT+ rights and her stance on Syrian President Bashar al-Assad
Getty
15/25 Andrew Yang
The entrepreneur announced his presidential candidacy by pledging that he would introduce a universal basic income of $1,000 a month to every American over the age of 18
Getty
16/25 DROPPED OUT: Julian Castro
The former San Antonio mayor announced his candidacy in January and said that his running has a “special meaning” for the Latino community in the US
Getty
17/25 DROPPED OUT: Marianne Williamson
The author and spiritual adviser has announced her intention to run for president. She had previously run for congress as an independent in 2014 but was unsuccessful
Getty
18/25 DROPPED OUT: Eric Swalwell
One of the younger candidates, Swalwell has served on multiple committees in the House of Representatives. He intended to make gun control central to his campaign but dropped out after his team said it was clear there was no path to victory
Getty
19/25 DROPPED OUT: Seth Moulton
A Massachusetts congressman, Moulton is a former US soldier who is best known for trying to stop Nancy Pelosi from becoming speaker of the house. He dropped out of the race after not polling well in key states
Getty
20/25 Amy Klobuchar
Klobuchar is a Minnesota senator who earned praise for her contribution to the Brett Kavanaugh hearings
Getty
21/25 DROPPED OUT: Jay Inslee
Inslee has been governor of Washington since 2013. His bid was centred around climate change
AFP/Getty
22/25 DROPPED OUT: John Hickenlooper
The former governor of Colorado aimed to sell himself as an effective leader who was open to compromise, but failed to make a splash on the national stage
Getty
23/25 DROPPED OUT: Tim Ryan
Ohio representative Tim Ryan ran on a campaign that hinged on his working class roots, though his messaging did not appear to resonate with voters
Getty
24/25 Deval Patrick
The former Massachusetts governor launched a late 2020 candidacy and received very little reception. With just a few short months until the first voters flock to the polls, the former governor is running as a centrist and believes he can unite the party's various voting blocs
STAN HONDA/AFP/Getty Images
25/25 Tom Steyer
Democratic presidential hopeful billionaire and philanthropist Tom Steyer is a longtime Democratic donor
AFP via Getty Images
1/25 Bernie Sanders
The Vermont senator has launched a second bid for president after losing out to Hilary Clinton in the 2016 Democratic primaries. He is running on a similar platform of democratic socialist reform
Getty
2/25 Joe Biden
The former vice president recently faced scrutiny for inappropriate touching of women, but was thought to deal with the criticism well and has since maintained a front runner status in national polling
EPA
3/25 Elizabeth Warren
The Massachusetts senator is a progressive Democrat, and a major supporter of regulating Wall Street
Reuters
4/25 DROPPED OUT: Bill De Blasio
The New York mayor announced his bid on 16 May 2019. He emerged in 2013 as a leading voice in the left wing of his party but struggled to build a national profile and has suffered a number of political setbacks in his time as mayor
AFP/Getty
5/25 Pete Buttigieg
The centrist Indiana mayor and war veteran would be the first openly LGBT+ president in American history
Getty
6/25 Michael Bloomberg
Michael Bloomberg, a late addition to the 2020 race, announced his candidacy after months of speculation in November. He has launched a massive ad-buying campaign and issued an apology for the controversial "stop and frisk" programme that adversely impacted minority communities in New York City when he was mayor
Getty Images
7/25 DROPPED OUT: Beto O'Rourke
The former Texas congressman formally launched his bid for the presidency in March. He ran on a progressive platform, stating that the US is driven by "gross differences in opportunity and outcome"
AP
8/25 Steve Bullock
The Montana governor announced his bid on 14 May. He stated "We need to defeat Donald Trump in 2020 and defeat the corrupt system that lets campaign money drown out the people's voice, so we can finally make good on the promise of a fair shot for everyone." He also highlighted the fact that he won the governor's seat in a red [Republican] state
Reuters
9/25 DROPPED OUT: Cory Booker
The New Jersey Senator has focused on restoring kindness and civility in American politics throughout his campaign, though he has failed to secure the same level of support and fundraising as several other senators running for the White House in 2020
Getty
10/25 DROPPED OUT: Wayne Messam
Mayor of the city of Miramar in the Miami metropolitan area, Wayne Messam said he intended to run on a progressive platform against the "broken" federal government. He favours gun regulations and was a signatory to a letter from some 400 mayors condemning President Trump's withdrawal from the Paris Climate Accord
Vice News
11/25 DROPPED OUT: Kirsten Gillibrand
The New York Senator formally announced her presidential bid in January, saying that “healthcare should be a right, not a privilege”
Getty
12/25 DROPPED OUT: Kamala Harris
The former California attorney general was introduced to the national stage during Jeff Sessions’ testimony. She has endorsed Medicare-for-all and proposed a major tax-credit for the middle class
AFP/Getty
13/25 John Delaney
The Maryland congressman was the first to launch his bid for presidency, making the announcement in 2017
AP
14/25 Tulsi Gabbard
The Hawaii congresswoman announced her candidacy in January, but has faced tough questions on her past comments on LGBT+ rights and her stance on Syrian President Bashar al-Assad
Getty
15/25 Andrew Yang
The entrepreneur announced his presidential candidacy by pledging that he would introduce a universal basic income of $1,000 a month to every American over the age of 18
Getty
16/25 DROPPED OUT: Julian Castro
The former San Antonio mayor announced his candidacy in January and said that his running has a “special meaning” for the Latino community in the US
Getty
17/25 DROPPED OUT: Marianne Williamson
The author and spiritual adviser has announced her intention to run for president. She had previously run for congress as an independent in 2014 but was unsuccessful
Getty
18/25 DROPPED OUT: Eric Swalwell
One of the younger candidates, Swalwell has served on multiple committees in the House of Representatives. He intended to make gun control central to his campaign but dropped out after his team said it was clear there was no path to victory
Getty
19/25 DROPPED OUT: Seth Moulton
A Massachusetts congressman, Moulton is a former US soldier who is best known for trying to stop Nancy Pelosi from becoming speaker of the house. He dropped out of the race after not polling well in key states
Getty
20/25 Amy Klobuchar
Klobuchar is a Minnesota senator who earned praise for her contribution to the Brett Kavanaugh hearings
Getty
21/25 DROPPED OUT: Jay Inslee
Inslee has been governor of Washington since 2013. His bid was centred around climate change
AFP/Getty
22/25 DROPPED OUT: John Hickenlooper
The former governor of Colorado aimed to sell himself as an effective leader who was open to compromise, but failed to make a splash on the national stage
Getty
23/25 DROPPED OUT: Tim Ryan
Ohio representative Tim Ryan ran on a campaign that hinged on his working class roots, though his messaging did not appear to resonate with voters
Getty
24/25 Deval Patrick
The former Massachusetts governor launched a late 2020 candidacy and received very little reception. With just a few short months until the first voters flock to the polls, the former governor is running as a centrist and believes he can unite the party's various voting blocs
STAN HONDA/AFP/Getty Images
25/25 Tom Steyer
Democratic presidential hopeful billionaire and philanthropist Tom Steyer is a longtime Democratic donor
AFP via Getty Images
If trade falls off, it’s a safe bet that a president doing his best unilaterally to constrain trade without Congressional input has a lot to do with it. With the American Action Forum estimating consumers have spent $70 billion more in taxes on imports, and the Congressional Budget Office estimating that the average household is losing about $580 in income, it’s not terribly surprising that consumers are tapping the brakes in response. That undermines the biggest argument for Trump’s re-election — that consumers are highly confident, favoring the party in power. (Similar arguments were made in 2016 about why President Hillary Clinton was inevitable — by, among others, me).
If investment falls off sharply, as it has in two of the last three quarters, you can say at a minimum that the tax cut isn’t working. Relatively low crude oil prices hurt this number too, since oil drilling is a large part of investment overall.
And, as Naroff notes, if growth this weak is all you get when you are running a trillion-dollar budget deficit a decade into an expansion, you haven’t got much.
Third, this hurts Trump politically more than you might think.
Yes, polls say 55 per cent of Americans approve of Trump’s performance on economics, according to Real Clear Politics. Some surveys — not all — show consumer confidence unusually high. But that’s hard to square with consumers spending less and seeing their after-inflation incomes grow less. When it’s time for consumers to show what they really think, they are pulling back.
Pundits — me included — thought relatively high stated consumer confidence would elect Hillary Clinton too. It turned out they weren’t that confident after all. The lesson: Watch what consumers do, not what they say.
The numbers, especially if they soften into quarterly growth figures starting with 1, will look uncomfortably like the record Trump purported to run against in 2016. His protests that 2017 and early 2018 were better won’t help his argument that he — not his predecessor Barack Obama — was responsible for those good times.
Worse, that slowdown in manufacturing is hitting places Trump needs to win. Unemployment is rising in Ohio and Pennsylvania for the last six months, albeit from low levels, and manufacturing employment is slowly eroding through the Midwest, including Michigan and Wisconsin. Trade policy is a big reason why, and its fingerprints are all over today’s GDP report.
It’s up to Democrats to make hay out of a record that is mixed to weak. It gets easier as the data gets worse.
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