According to a report from Politico, Donald Trump’s re-election prospects in 2020 could likely hinge on needing two big wins on the economic front that will keep voters who dislike him on a personal level but are willing to vote for him based solely on jobs and pocketbook issues.
As the report notes, Trump’s unlikeability — should he fail to resolve his tariff war with China and pass a new NAFTA — could be his undoing.
With the report stating that Democrats are no hurry to help the president on the new NAFTA, since they have objections to several details, and China looking out for their own interests, the president may have to bend or break to get something done as the election bears down on him in less than a year.
“Businesses are sitting on cash instead of making investments. Growth is stalled at around 2 percent and expected to slow. Jobs numbers are decent but far from ‘yuge,'” Politico reports. “And big campaign promises remain unfulfilled. Even Trump’s most ardent supporters acknowledge the president’s reelection bid would face enormous risks if the economy turns down next year.”
According to Stephen Moore — who was once under consideration by the president for a spot on the Federal Reserve — the president has a real problem.
“If the economy starts to falter in 2020, Trump can’t win. There are just too many people who don’t like him but would otherwise vote for him in a good economy,” explained Moore who still provides advice to the president. “And Trump knows that. He gets that. He knows he needs a strong stock market and a strong economy. And getting a China phase one deal done and getting USMCA done would significantly reduce the threat of any kind of slowdown or recession in 2020.”
“Trump’s top internal advisers get it as well,” Politico reports. “They know the difference between an economy suffering under continuing trade wars — and one in which both a China deal and NAFTA are largely resolved — could be the difference between a one- and two-term Trump presidency.”
According to top Trump economic adviser Larry Kudlow, “There are a lot of different estimates around but several, including the Council of Economic Advisers, have suggested that a satisfactory China deal plus USMCA could add almost 1 percent to next year’s GDP. That’s a difference between a 2 percent economy and a 3 percent economy and that’s very powerful.”
“Markets continue to move ahead under the expectation that a China deal will get done and USMCA will ultimately pass. Failure of one or both could trigger a serious decline on Wall Street, analysts warn. At a rally in Florida on Tuesday, Trump once again heralded the recent run of market records — but those are all at risk if the China deal and new NAFTA fizzle,” the report continues.
“I don’t think investors understand that the levels of ‘uncertainty’ are totally unprecedented according to many measures,” explained Wall Street analyst Richard Bernstein, “We are in uncharted territory and the economy is accordingly slowing and [capital expenditure] is weak because risk premiums are higher than normal.”
“Recent talk of possible recession in 2020 has largely died down. But it could flare up again in a significant way if Trump fails on both the USMCA and China,” the report concludes.
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