President Donald Trump has entered 2020 with one of the best allies an incumbent president can have in an election year: a strong economy.
The unemployment rate has remained below 4 percent for more than a year and a half. In November it fell back to 3.5 percent, the lowest unemployment rate in 50 years. Working-age Americans, discouraged by years of low-growth and low-wages, are returning to the labor force. Wage growth for workers hit 3.7 percent. Jobless claims suggest that layoffs remain very low. The economy added jobs at a breakneck pace in November.
Inflation, which many economists thought would pick up this year due to labor market tightness and tariffs, remains very low and very stable. Tariffs have not driven up the prices of consumer goods. Consumer confidence remains high.
The desperate claim by some Democrat politicians that Americans are having to work multiple jobs to make ends meet is baseless. The majority of workers have one paid job at a time. The number of Americans employed in secondary jobs is small and relatively stable. It has picked up a bit in recent years because more jobs are available. And even after the recent uptick, multiple job holding is still lower than it was before the recession and quite a bit lower than it was in the 1990s.
Most importantly, the recession worries that loomed so large for so much of last year have evaporated in the presence of consistently good economic data. That has upended the plans of Democratic presidential hopefuls and strategists who had planned to use any economic downturn against Trump.
“Donald Trump could be the first president since Jimmy Carter to run for re-election during a recession,” a CNBC headline proclaimed in December 2018.
That is increasingly unlikely. A recession is never impossible and as I explained last year, we’re almost always just a couple of years away from an economic slump. But the chances of a downturn hitting before November are vanishingly slim. The economy has been strengthening for the last few months. Even the manufacturing sector, which slowed last year as global economic growth turned sluggish, is regaining its footing.
This is very good news for those looking forward to the prosperity the second term of Trump’s presidency could bring. And it is bad news for those who desperately desire Trump’s electoral defeat.
Don’t take my word for it.
A forecasting model produced by Moody’s Analytics has accurately predicted every election outcome for twenty years except one. And that was Trump’s 2016 win. Based on the health of household finances, the stock market, and the labor market, the Moody’s model sees Trump winning 332 electoral votes, more than the 305 he garnered in 2016. Trump needs just 270 to win a second term.
Yale University’s Ray Fair has been forecasting presidential elections since the 1970s using a model based on how the economy is doing. His October 30th update had Trump beating Democrat candidate by about 4 percentage points. That was based on GDP growth around 2 percent and inflation around 2 percent. But things are looking better now than they were in October, with economic growth picking up and inflation remaining lower than expected. That strengthens Trump’s odds.
These models do not require the economy to boom. If growth accelerates more than expected, Trump’s electoral odds will improve even more. But they predict a Trump win even if all the economy does it perform around where it has in recent months.
Oxford Economics, which had accurately predicted the popular vote in 16 out of the last 18 elections, sees Trump with a 5 percentage point win in 2020–even if the economy were to slide into a recession. The economy has just been too strong for too long for the model to predict Trump losing.
None of this guarantees a win for Trump, of course. Americans know that a strong economy is great but it is not the whole of life or politics. Trump will still have to persuade Americans that a revitalized economy is part of his broader vision for making America a better, stronger, and more humane country.