Labor Day is the traditional kickoff of presidential election campaigns. Before that, only die-hard political pundits and devotees pay attention to the election. It is with that in mind we revisit the economic criteria for Trump’s political fortunes that I outlined just after his inauguration (see Forget politics! Here are the 5 key macro indicators of Trump’s political fortunes). I followed up a year later with an interim report card (see Trump’s one year report card).
While Trump likes to measure his performance by the stock market, the stock market isn’t the economy, and the economy isn’t the stock market. Historically, the market has shown itself be neutral towards Republicans and Democrats in the White House.
Instead, I offer the Newt Gingrich criteria, which he laid out in a NYT interview just after Trump’s inauguration:
“Ultimately this is about governing,” said former House Speaker Newt Gingrich, who has advised Mr. Trump. “There are two things he’s got to do between now and 2020: He has to keep America safe and create a lot of jobs. That’s what he promised in his speech. If he does those two things, everything else is noise.”
“The average American isn’t paying attention to this stuff,” he added. “They are going to look around in late 2019 and early 2020 and ask themselves if they are doing better. If the answer’s yes, they are going to say, ‘Cool, give me some more.’”
The Newt Gingrich criteria is a variation of Ronald Reagan’s “are you better off than you were four years ago” campaign slogan. The economy is one of Trump’s perceived strengths. In survey after survey, voters consistently trust Trump than Biden on the ability to deal with the economy.
Assessing Trump on the Newt Gingrich criteria
The following are not cherry picked statistics, but a criteria set out in 2017 when Trump took office. At the time. I concluded:
I urge my readers to cut through the political noise and watch the aforementioned five key indicators of whether Donald Trump can keep his promises to his political base. As well, keep an eye the reaction from Republican members in Congress as a measure of whether the new administration can successfully pass legislation.
Bloomberg Intelligence chief economist Carl Riccadonna had compiled a list of five economic metrics to watch as signs of American prosperity, all without resorting to “phony” statistics like GDP and the unemployment rate. Let’s take a look at how he has done since then.
Prime age labor force participation rate: If prime age discouraged workers can return to the labor force in size, then score a win for Trump. Trump had promised to Make America Great Again by bringing jobs back. The prime age LFPR had recovered to levels reached just before the onset of the Great Financial Crisis.
Full time workers as a % of the labor force: Trump promised good jobs. That means full-time jobs. Sadly for Trump, full time employment never really recovered to levels seen just before the peak in the last cycle.
Manufacturing workers in the economy: The point behind bashing Mexico and China on trade was the disappearance of manufacturing jobs, which tend to be well paying. The good news is manufacturing jobs have arrested their decline. The bad news is there has been no meaning revival in manufacturing.
As for the trade war, China’s trade surplus with the US has grown since Trump took office.
Capital expenditures: One of the puzzles of this economic expansion has been the tepid pace of capital expenditures. Trump’s tax cut and initiative for the repatriation of offshore corporate cash is intended to address this problem. While the tax cut didn’t seem to address the problem, capex did flatten and rise marginally. Call this a narrow win for Trump.
Net business births: Net business births is a useful bottom-up derived of economic confidence and business dynamism. I couldn’t find any regularly reported statistics of business formation. However, recent high frequency data shows that the number of small businesses open plunged, recovered, and weakening again.
That said, NBIB small business optimism index recovered in August. Of the small businesses that have survived the pandemic, they are becoming more confidence about their own outlooks, and their hiring and expansion plans have improved. A longer term analysis of this index shows a spike with Trump’s election, a plateau, followed by a pandemic induced plunge and partial recovery.
The verdict
Having reviewed the five criteria set out in 2017, what’s the verdict? Before the onset of the pandemic, Trump was getting a marginal passing grade on the economy. The pandemic erased any gains he might have had.
As for Newt Gingrich, he offered the following assessment in a recent NYT article.
“He has to continue focusing on the network of anti-American lawlessness,” former House Speaker Newt Gingrich said of Mr. Trump, urging him to “emphasize American patriotism and history versus the left’s anti-Americanism” and to “turn Biden into McGovern.”
Gingrich has shown himself to be an astute political strategist. His silence on his own criteria set out in 2017 and advice that Trump should pivot to a “law and order” focus speaks volumes about what should one of the President’s strengths – the electorate’s confidence in him to deal with the economy. If Trump is to win the election, his path to victory is not through his management of the economy, and through other means.
I don’t agree that this election will be an “are you doing better than 4 years ago” type of election. EVERYONE knows that the Covid virus has wrecked the economy and it wasn’t the fault of Donald Trump. Further, I read a poll (biased of course) that said 60% favor how Trump has handled the pandemic.
I also believe Americans are in tune with what the democrats are trying to do and will vote against it. For instance;
1) The fake Russiagate pushed by the democrats
2) The fake Impeachment executed by the democrats
3) The riots in major cities from democrat leaning groups
4) The lack of democrats denouncing the riots and local democrats and Harris pushing for more
5) Joe’s endorsement of AOC’s Green New Deal which will disrupt American life and cost trillions of dollars
6) Joe will increase taxes and everyone. It won’t just be the wealth who already pay the vast majority of taxes. This story with Joe’s wrong headed policies goes on and on. Americans are already showing in the biased polls that they are rejecting what the democrats are offering.
Oh, did I mention that Joe wants to increase your Capital Gains taxes to the same rate as ordinary income? Now I have.
As I pointed out, Trump’s path to victory will not be based on his management of the economy. That said, it should have been a source of advantage for him as polling has him consistently ahead of Biden on this issue.
Pre-COVID, management of the economy would have been a competitive advantage for him and he could have run on “are you better off than you were four years ago”. But even based on those metrics, he was only getting a marginal passing grade.
I think you can chalk up your last paragraph to the war on China with tariffs. Trump was the first President to call out China and try to start righting the wrong. Let’s hope we don’t backslide after November.
Counterpoint: Trump owns the 200,000 dead, the chaos in the streets, the job losses, the bounties on our soldiers he has failed to condemn or even question, the unending stream of lies and corruption, there is just too much to even begin to list it out Wally, all of the items on your list are complete nonsense. Trump was impeached, that wasn’t fake, and had they removed him from office we would be in a much better place as a country, but here we are – Trump and the republicans complicit in his fascist grifter circus are absolutely at fault for where we are today, and should be held responsible at the polls here in a few months. It is “always” an “are you better off than 4 years ago” question, does anyone really want four more years of this dumpster fire? Americans are not in tune with anything you are saying, only those who watch OANN at this point would think any of that, even Fox News is half way off this sinking ship. What do you make of Trump calling the troops “losers and suckers” for dying in the conflicts various executive branches chose for them to die in? In a normal world that would be enough to disqualify someone from being the ‘commander in chief’, but in the current timeline I am guessing there is some rationalization that makes this “a-ok” to the Trump faithful?
Wow! You sure do fall for those MSM lies, Jarad.
I think reality in this situation is definitely complex (disclaimer: I’m not a citizen of USA).
For example…facts against Trump: “6% only from Covid thing” is incorrect, as discussed here: https://youtu.be/fsVhY6QAzrU
However, facts in Trump’s favour, when one looks at excess deaths for a few of the swing states (here are a few), it could make for a very volatile two months (blinding glimpse of the obvious 😉 The school and university/young people thing looks overcooked, for example…
All USA and dashboard: https://imgbox.com/ot7rclIS
Swing state 1, Wisconsin: https://imgbox.com/iNSwRr7x
Swing state 2, Michigan: https://imgbox.com/vMzv6W7F
Swing state 3, North Carolina: https://imgbox.com/u81bvqkR
via https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm#dashboard
There is a risk of “public fatigue”, similar to what is being seen in parts of Australia: https://youtu.be/1kURFv5evvk?t=218 (Sky News discussing contrasts in police response in Victoria, for example).
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Jarad, regarding to the “losers and suckers” statement. Other than the Atlantic article and “sources”, do you have any other facts to dispute the countless military officers and many of the staff that was with Trump at the time that disputed this article. It seems like the author has back off a little. Maybe/if the “sources” has a little guts to come out of hiding. I’ll wait…
Hi Mark, I have not seen any disputes to the claims. Just did a quick google search and see results for “Trump disputes” and a link to Fox news that says “sources” dispute claims, but really what are they saying? That they never heard him say a thing that other sources, sources who were confirmed by Fox news and other outlets, heard him say? I guess the rationalization is that “he didn’t say it, it’s fake news”. I too would appreciate if the sources went public, but given the death threats they would surely get I can understand the hesitation. Fingers crossed they go on the record, but I doubt they will. It does seem to be to be something Trump would say given his past comments about McCain, specifically the “I like people who weren’t captured” type of comments. That seemed crazy to me, but was before the last election and didn’t make a difference then.
I grew up in a communist country but I don’t remember witnessing so much disinformation and propaganda as what I see nowadays coming from the MSM, CNN et al. It has been hoax, after hoax, after hoax + Orwellian newspeak. Apparently it is working…
Foxnews was similarly horrible some time ago, during the Bush years. But because the democrats have evolved into the radical image that Fox has been portraying them to be, it is now more credible.
I consider myself a left wing liberal, by the way. The current democratic party has very little to do with traditional liberal values or social democratic policies; it has been an obstacle for the emergence of a true progressive movement for years. Even worse – it’s now a menace for our democracy. Trump, on the other hand, has done some really good things and nothing as evil as Obama’s/Clinton’s (and Bush of course) foreign interventions.
Stan, I was born in America 73 years ago and I have never seen people on the far left behave like they have the last 4 years. Never.
The best thing for the Democrats would be a Trump landslide. That is the only thing that would shock the party back to reality and make them reorganize their priorities.
The other thing I see is that Americans are moving away from God. When you don’t believe in God you don’t believe in his commandments or the lessons of the Bible. I think God will abandon us if we continue that path.
This, from Matt Taibbi is relevant, I think:
“…News consumers on both sides today behave quite like cultists. They self-isolate. They’re kept that way by being fed a steady diet of terrifying stories about fellow citizens.
Red-staters are told liberals are terror-sympathizers desperate to eviscerate American culture from within out of white guilt.
Blue-staters are peppered daily with stories of fellow travelers and traitors in their midst, the latest and most incredible example being NBC’s effort to paint presidential candidate Tulsi Gabbard as a tool of the Kremlin.
Most intelligent people in the Gabbard case could see Beltway hacks were piling on a politician for taking a heretical stance against a foreign military deployment.
Still, the underlying message was important: Russian influence is everywhere, and anyone, even a member of congress, might be a witting or unwitting agent. Be vigilant! Suspect everyone, except us! We’re the only people you know are unaffected.
This deeply paranoid view of the human experience, telling all America it lives on a violent invisible influence battlefield, is the opposite of what the news used to be. The news was once a placid ritual designed to amp down the viewer’s political reflex.
The church of the press was a sleepy place. In the seventies and eighties, in fact, news was infamous for its non-confrontational nature and vapidity. This was the joke of Anchorman, that the biggest story in human history was a panda birth.
News companies then were trying to train audiences to be docile and unconcerned.
A local news affiliate would pack its lineup with cat-in-tree segments, and the weather slots got longer and longer throughout the decades. A local reporter once joked to me that the highest paid news-gatherer in every city would soon be a helicopter. Aerial shots of the local skyline were more important than fifty, a hundred exposés…”
The helicopter…!! 🙂
Source: https://taibbi.substack.com/p/turn-it-off
I came across comment on another forum that I follow.
It’s a long, but “sanely reasoned” opinion (IMHO) on the “loser bombshell”:
________________
“…discussions like this frustrate me because the arguments often put me in the position of seeming to defend Trump. (And, it’s not just Trump. I don’t particularly feel good being in the position of defending anyone in public office because they can defend themselves). But here goes.
There are a couple reasons that a lot of people – and not just die-hard Trump supporters – don’t care about these “bombshell” reports and/or supposed Trump lies. For one, it’s because most of us see him for what he is – a pretty smart, successful and flawed guy (like a lot of successful people) – who is also a Showman, in the old sense of the word. He’s part huckster, part fabulist, part embellisher for effect, part jokester, part entertainer, sometimes liar, and often truth-teller. And, often, he just jangles up his words and syntax.
For example of the last, he’s lashed out at McCain, who often lashed out at him in pretty insulting ways, as ONE person who he thinks is a loser for a host of reasons, most of which don’t have to do with McCain’s military service. He’s said – I don’t like people who get captured and THEN, McCain is a loser because McCain ran for President more than once and then lost to Obama badly which I think Trump thinks is the worst thing any politician could have done. So, he’s sort of right to say that he didn’t call McCain a loser if people are accusing him of calling McCain a loser based solely on McCain’s military service. Now, I recognize that is slicing this pretty thin and likely too thin for most people, but you can see – in Trump’s head – him actually holding 2 seemingly oppositional ideas: “I called McCain a loser;” “I did not call McCain a loser for being in the military; I was pointing out that he’s just generally a loser – how did he lose to Obama; and why did he let himself get captured too.”
Second, people accuse Trump often of things that are just so outrageously not believable for anyone who’s been alive and living in America for a while that they demolish their credibility on anything else. For people who have seen Trump’s career and heard any of his comments over the years, the notion that he was a Russian stooge was just bizarrely untrue and clearly a lie. To say someone who’s lived all their life in NYC and partied at Studio 54, etc. is homophobic (any more than anyone else in politics) or someone who – literally – was a god to hip hop artists across the golden years of hip hop and rap is racist (any more than anyone else in politics) was equally just bizarre. And, to say someone like Trump – who is not stupid or insane – would rant about a whole entire cadre of soldiers who died as “losers” or “suckers” in front of a bunch of people he knows he can’t trust, and base this whole story on people who won’t come forward on the record and is disputed by someone like John Bolton who clearly hates Trump, is not only a bizarre lie but a stupid lie.
Finally, and very much most importantly, the accusations of Trump’s “lying” or joking or embellishing or whatever are 99.9% completely irrelevant to most people’s lives. I could give a rat’s you-know-what whether Trump actually did call McCain a loser solely for his military service, any more than I cared about him making up school yard names for Jeb or Rubio or Kasich or HRC, etc etc. He revels on these feuds with people who take him on and he knows he gets under their skin. But, how does that effect anything in our lives? It doesn’t. What is much more devastating ARE actually the lies all the other politicians tell where they proclaim they are going to be pushing certain policy platforms while telling their big donors the opposite. What matters is when Obama pushes a “health insurance” bill where he promises people can keep their doctors when he (or at least his staff) knows they won’t. Everyone in the media obsesses over these completely idiotic supposed “lies” by Trump which effect no one other than the feelings of already powerful people. But, lying to the American public about what you are going to actually do as President that will impact their lives – Complete crickets. Where Trump actually hasn’t lied about his policy positions on trade, immigration, the federal courts, economic opportunity for all – especially POC. In those areas, what you see is what you get with Trump. And, THAT’S why so many of us DO.NOT.CARE. about these “bombshell” accusations against Trump. And, so many people (not me – I trust but verify) trust him to do what is best for the US relatively unreservedly…”
Thanks Donald.
yikes.
Biden is running on “I am not Trump”. His subtext is Trump’s character, and Trump’s pandemic response.
Trump is running mainly on the “law and order” theme.
Both are selling fear. It will be a disaster and existential threat to you the voter if the other guy wins.
We’ll have to see who gets more traction. The economy will be only a footnote in this election.
NBC fake poll showing Trump is now tied with Biden. That means Trump has about a 10 point lead.
The fundamental debate is about the future direction. What is in front of the voters are stark choices:
Biden: socialism (no matter how you dress it up)
Trump: Capitalism that needs a heart
Both are imperfect messengers and personalities.
Are we ready to move to socialism without boundaries on immigration, law and order, restrictions on free speech and regulatory hell?
One look at Europe and the choice is clear.
AstraZeneca COVID-19 vaccine study put on hold due to suspected adverse reaction in UK participant.
https://www.foxnews.com/health/astrazeneca-covid-19-vaccine-study-hold-adverse-uk
Wally and Jarad reflect two entrenched views of our political landscape. Unfortunately, there does not seem to be a middle ground which reflects the better good for the country. If the election is close, neither side is going to back down. I can envision chaos and lawsuits in numerous states. If that happens, we need to embrace volatility. As the saying goes “baby you have not seen nothing yet”.
I agree with you 100%, Rajiv. But I hope we are wrong for the sake of America.
On recent options activity, this is a great thread: https://threadreaderapp.com/thread/1302725084075810817.html
Well, this seems to be typical, this election brings out disagreements.
I won’t vote for Trump, but he might win anyways.
Covid is special, and a lot of people have received help from the government, so they may feel Trump did it.
Covid came from China, so China bashing is even better.
Socialism is coming, it’s inevitable, because robotics and AI are coming, eventually. When we had the industrial revolution, and people left the farms because machinery meant that less could do more, they moved to the cities, and yeah we had a revolution in manufacturing…cars, sewing machines, whatever. So now we have AI and robotics, where will those who do menial work move to, Mars?
Yes, I get it, as someone who became an MD etc , paid all his bills, never filed for bankruptcy, it’s not my style to put a hand out and say “God Bless”, but it’s coming, it is in my opinion inevitable if productivity continues to rise. Robotics will do that.
But politicians don’t really do much other than set up a new regime, which of course they control.
What we will get from either side is more money printing and low interest rates until the wheels come off.
Money printing for social programs, because if they don’t things will get really nasty…my guess is they don’t want that.
Low interest rates in order to not drown in the federal deficit, but also to not nuke the economy.
This will take a long time to play out.
But most of the world is in debt…who do we owe it to? The reassuring part is debt is everywhere, so we are not alone.
The bad part is that if interest rates stay low is that many will borrow for needed expenses (or not) and become stuck as debt slaves, because eventually the burden of debt shifts more and more to simply paying the principal, not the interest.
Life in the 60s and 70s was less stressful, especially for Canadians
Yodoc2002, I would like to send all of the democrats and those even farther left to Mars. Well, Except for my wife and you, of course. But definitely my mother-in-law should go. 🙂
Sorry, yodoc2003, I unintentionally typoed your name.
Taking another swing at the long bond.
Anything can happen (and has happened this year) – but I think SPY will breach 320 over the next week or two.