Corporate America is backing Donald Trump to win the 2020 presidential elections despite the overhang of controversy that follows him around. Wall Street finds it impossible to look beyond Trump’s results in terms of GDP growth and record levels of low unemployment.
Though the president has spent much of his first term struggling with the worst approval ratings for any U.S. president since Richard Nixon, it seems the broader U.S. population is starting to get on the Trump bandwagon driven by impressive economic performance.
Trump appears to bluster his way from one crisis to another, but the President has overseen a period of unusually strong growth within the record-breaking bull market period that has seen the U.S. economy add new jobs every month for 101 months in a row.
Eager to keep things up, Trump has run up the deficit and cut taxes to encourage businesses and consumers to spend and invest. Based on current approval figures, it would seem as though the message is getting through to voters.
All of this is unsurprisingly right up Wall Street’s alley. Four percent unemployment in an economy that added over 304,000 jobs in January alone means corporate America really couldn’t care less about Stormy Daniels or Michael Cohen or Trump’s Pocahontas jokes on Twitter.
Donald Luskin, chief investment officer of TrendMacrolytics and predictor of Trump’s 2016 win, says:
The economy is just so strong right now, and by all historic precedent, the incumbent should run away with it. I just don’t see how the blue wall could resist all that.
It’s not all smooth sailing for the president though, as some significant problems remain. The economy appears to be slowing. U.S. industrial performance surprisingly failed to hit its February target by a long way. Commerce Department data also shows that consumer demand slipped in February as wholesale inventory numbers went up sharply. The Federal Reserve has also predicted that 2019 GDP figures will not meet Trump’s three percent growth target, which 2018 figures nearly hit.
The big headache this has for Trump is that if the economy stops doing so well, there will be nothing to hold his hard-won approval ratings together. Voters may be willing to hold their noses and vote for him if they feel that his presence guarantees strong economic performance, but if that slips away, there is no reason to overlook his plethora of scandals and controversies.
This creates a further problem for Trump, who has overseen the expansion of the deficit into the largest figure for a non-recession period. Doing this has made large scale financial stimulus packages possible, resulting in the impressive economic figures he regularly brags about, but there is a feeling in economic circles he may have overplayed his hand. If the U.S. does fall into a recession, the government will be too leveraged to be able to raise more debt for an economic stimulus package.
Then, there’s the small matter of Trump’s legal problems, primarily within the Southern District of New York. He may be off the hook from a Mueller indictment as CCN.com reported recently, but there are still cases that, in theory, could seriously dent his image or compromise his presidency.
For now, all this remains strictly hypothetical. The economy is still doing well, his approval numbers are up from 2017’s lows, and Wall Street is behind him. Right now, things look good for Trump.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.
Last modified: July 2, 2020 8:13 PM UTC