Jan 7, 2020: Investors should not assume that President Donald Trump will stay in the White House just because of thestrongU.S.economy, according to an analysis from Morgan Stanley.
Policy strategist Michael Zezas said that while historically incumbent presidents with “good economies are reelected, Trump is missing something the others had going for them.
“We have a president with a good economy who’s never had a net positive approval rating,” he said.
“It’s entirely possible that it’s a coincidence,” Zezas also offered, referring to any such correlation between reelection and the economy.
Zezas said Trump is missing something that those past good-economy incumbent presidents had: Stronger job approval than disapproval. “All of those that had good economies also had net positive approval rating.”
That makes Trump a standout.
“Now we have a president with a good economy who’s never had a net positive approval rating,” Zezas added, referring to the difference between the approval and disapproval ratings.
Trump’s approval rating hovers around 45%, according to a data compilation fromRealClearPolitics, with disapproval at more than 52%. That translates into a net negative spread of about 7%.
Trump is about mediocrity, which is why there’s a greater danger of a recession. Trump touting the stock market is about gaslighting and ignoring the pattern of volatility. And then there's that massive deficit and all those deadly moves in defense and the environment, aside from Trump failing to develop underlying US productive capacity. Trump continues to coast on a strong Obama economy while risking it all for future generations on irrelevant trade policy with dimwitted staff.
—“So we’re at 3.3 percent GDP. I see no reason why we don’t go to 4 percent, 5 percent, and even 6 percent.”
—Speaks of GDP “getting up to 4, 5, and even 6 percent, because I think that’s possible.”
THE FACTS:
Federal Reserve officials and most mainstream economists expect economic growth to hew closer to 2 percent. There are no signs the economy is capable of delivering a phenomenal and rarely achieved growth rate on the order of 6 percent.
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U.S. economic growth is now slowest since 2016, despite the tax cuts. 13 million workers need more than 1 job, according to the Census.
Economic growth is slower than Obama’s last 3 years.
Obama’s last three years had better growth than Trump’s three years
A better metric to use than the GDP growth rate that is reported each quarter is the change year over year. The main reason is that quarterly results take the quarter-to-quarter change and multiples it by four. This means that any component having a stronger or weaker result in a quarter can create a yearly number that is not a good indicator of the real economy.
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The US Commerce Department announced a GDP growth rate of 2.3% in 2019. A strong domestic economy was dampened by the US-China trade dispute and slowing global economy. Furthermore, the Federal Reserve left rates unchanged. #economicgrowthhttps://t.co/Z70HWG1vZ0pic.twitter.com/HxwsaXN2cj
U.S. economic growth is now slowest since 2016, despite the tax cuts.
To the contrary, as the new GDP report showed real business investment has declined for three quarters in a row, the worst such stretch since the last recession.
Though it's commonly thought that Keynes was just talking about recessions, that's not quite right. His deepest and most lasting insight was that it is not unusual for market economies to underperform, and when they do so, there's a mechanism—public spending—to get back to full capacity.
Simply put, the tax cut was all Keynes, no Laffer. It perked up the 2018 growth rate but it did nothing, as the above-cited investment numbers imply, to lift the economy's underlying productive capacity. www.businessinsider.com/…
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When I started covering money in politics, I had a hard time understanding what it meant for someone to donate $100 million. So I calculated it over their net worth, then applied it to my savings, just to comprehend.
