‘He could have had it all. And he doesn’t have it all.’
As year four unfolds, several key numbers and trends will determine just how much the economy will help Trump overcome impeachment, low approval ratings and serious shortcomings with women and minority voters.
“The stock market he’s got. Wages he’s got. The consumer side of the economy is working really well,” said Gary Cohn, Trump’s first National Economic Council director. “The soft underbelly is [that] capital expenditure is not there.“
“He stood there in Pennsylvania and talked about bringing steel mills back and what’s happened is we’ve cut steel lines,” Cohn said. “We gave companies a big tax cut then took it away with tariffs. These are the pieces that are missing. I think he could have had it all. And he doesn’t have it all.”
Here’s a guide to some of the key economic trends and numbers in Trump’s fourth year that could help determine if he survives the rest of the chaos that swirls around his presidency each day.
U.S. manufacturing fell into recession for all of 2019, according to data from the Federal Reserve, with industrial production dropping 1.3 percent for the year — a sore spot for a president who promised his tough approach to trade would return robust factory growth to the American heartland. Industrial production dropped 0.3 percent in December alone.
The worst case scenario for Trump on this front is that approval of the new NAFTA deal and a truce in the tariff battle with China fail to revive the manufacturing sector. Factories showed some positive signs early last year only to fall back again, hit by a strike at GM and a big hit from Boeing halting production of its 737Max jets.
But there are at least some signals that the worst could be past.
Completing the first phase of the China trade deal “in theory ought to boost the manufacturing sector in the short term,” Pantheon Macroeconomics chief U.S. economist Ian Shepherdson said in a note to clients. China’s commitment to boost its purchases of U.S. factory goods by $33 billion relative to 2017, before the trade war began, amounts to a 1.5 percent increase in manufacturing.
That’s “not a macro game-changer, but not trivial, either,” he said. On the downside, much of the existing China tariffs remain in place, a continuing drag on manufacturing costs.
Key date to watch: Feb. 3. The next manufacturing report from the Institute for Supply Management comes out the first weekday in February. Can the United States-Mexico-Canada Agreement and the China deal help push the index back above 50, into expansion territory? That would be a big win for the White House, especially if it’s sustained and Trump can talk about real manufacturing growth.
Jobs and economic growth
Trump is on solid ground bragging about job creation under his watch, with the three-month average still close to 200,000 new jobs a month and unemployment at a historically low 3.5 percent. He has not, however, delivered year after year of economic growth above 4 percent — as he promised during the campaign and when touting the 2017 tax cut bill.
U.S. economic growth nearly hit 3 percent for 2018 after the tax bill unleashed a wave of initial corporate spending. But growth slowed again in 2019 as the trade war intensified and the rest of the world slowed down, with the fourth quarter not expected to exceed 2 percent.
Trump badly needs more robust GDP numbers to tout on the trail. And at least some of his more ardent economic supporters think he could get them. Residential construction spiked to a 13-year high in December and consumer spending remains strong.
New homes often come along with spending on other durable goods and can help drive up GDP even in the face of continuing trade pressure and other worries that could mount over the outcome of the election in the second half of the year.
“It’s highly likely that there’s very strong growth at least in the first half of the year that is sort of tempered later by threats over election uncertainty, which tend to slow things down a bit,” said conservative economist Kevin Hassett, who formerly served as chair of Trump’s Council of Economic Advisers. “Also, it’s worth noting that wages are growing faster for those without a college degree than with a college degree.” That, presumably, would help Trump among his blue-collar base.
Key dates to watch: July 30, when the initial estimate of second-quarter GDP is released. Most estimates for the first quarter are still around 2 percent. If Trump is going to get a 2020 bump in GDP that he can take into the heart of the campaign season, this is likely when it would come.
Oct. 2: This will be the final jobs report before Election Day. The numbers will be important all year, but the final reading of the campaign cycle will indicate whether the trends in job growth and low unemployment remain steady. If the numbers soften — as some economists expect — and unemployment is rising, it wouldn’t be deadly for Trump but it could deliver some nasty headlines and make his pitch to voters more difficult.
Swing-state jobs numbers
While the national jobs numbers look strong, that’s not entirely the case in some key swing states such as Pennsylvania where the unemployment rate is ticking up and hit 4.3 percent in November. Among the drivers: plant closings and threatened layoffs like those made by Allegheny Technologies, which said it could lay off at least 100 workers due to tariffs on imported steel used in making final products.
Unemployment in Michigan is also higher than the national average, at 4.0 percent. Swing-state Wisconsin is in better shape at just 3.3 percent. Ohio may only barely be a swing state anymore but it also boasts a jobless rate of 4.2 percent that has been rising for the last few months.
Ohio was also on track for a net job loss in 2019, the first time since the Great Recession, according to the Columbus Dispatch, which also called into question Trump’s claims of bringing automotive jobs to the state.
These numbers will likely only matter if a Democrat can go into these states and make the case that Trump has not actually improved economic matters much, if at all, despite his robust Make America Great Again claims.
“The question is whether Joe Biden or somebody can go in there and come up with something different and something better,“ Cohn said. “And frankly they’d start with most of the women and minorities in the world hating Trump and they’d have to add to that.”
Key dates to watch: Swing-state employment figures will come from monthly reports on job trends that lag behind the national figures. Moves in the wrong direction, especially in the Midwest, will create an opening for the eventual Democratic nominee as Election Day approaches.