In August, some economic forecasters were saying there was a 50 percent chance of a downturn by no later than the end of next year. Now, the conventional view is that 2020 will be a year of steady and sustained economic growth.
Given the track record of economic forecasters, this prediction may or may not be good news for the economy. But let’s take it at face value and assume it’s good news. If so, it’s also very good news for President Trump’s reelection prospects.
To what do economists attribute the rosy forecast for the economy in 2020? Two things, according to the Washington Post: the series of interest rate cuts and the apparent resolution of two trade-related threats.
The Post is careful to give no credit to Trump for either development. It quotes economists who say that Trump should thank the Fed for reducing rates after he escalated the trade war.
I seem to recall, however, that Trump pressured the Fed to reduce rates. Maybe the Fed should thank Trump.
On trade, the Post blames Trump for starting the trade wars, the easing of which is now boasting the economy. It overlooks the benefits of the trade agreements Trump has negotiated. If Trump has kept the economy rolling while gaining trade and other concessions, that’s a substantial accomplishment.
I think it’s largely undisputed that the revised trade deal with Mexico and Canada will be beneficial to the U.S. We don’t know the details of the deal with China, and I’d be surprised if China’s concessions are huge and far-reaching. But I’d also be surprised if they are non-existent.
Here’s what we do know. First, no president since World War II has failed to be reelected when the unemployment rate was below 7.4 percent. Second, the unemployment rate in November 2020 is almost certain to be well below 7.4 percent.