Paul Krugman says new economic data doesn't look good for Trump — even if we avoid a recession

Until quite recently, the healthy economy was seen as President Donald Trump's main strength heading into re-election. But as signs of a potential coming recession have emerged, many analysts now believe the president's one-time asset could be his undoing.

Paul Krugman noted on Twitter Tuesday, however, that even without a recession, new economic data could spell trouble for Trump. He pointed to a new report from Bloomberg that found:

The Institute for Supply Management’s purchasing managers index fell to 49.1 in August, weaker than all forecasts in a Bloomberg survey of economists, data released Tuesday showed. Figures below 50 indicate the manufacturing economy is generally shrinking. The group’s gauge of new orders dropped to a more than seven-year low, while the production index hit the lowest since late 2015.

The data add to concern a broader U.S. recession is coming and may complicate the re-election chances of President Donald Trump, whose pledges to revive manufacturing have been a signature issue. At the same time, Trump’s escalating tariffs on imports from China have been a major reason behind factory weakness that threatens to spread to consumer spending, which accounts for about two-thirds of the world’s largest economy.

"Manufacturing is very cyclical, so this doesn't mean a recession — but it does suggest a continuing slowdown," observed Krugman. "The GDP trackers will weigh in with more sophisticated estimates, but a quick and dirty look at the data since 1990 says that slightly contracting manufacturing probably means GDP growth significantly under 2%."

He added: "Since everything is political: while not a recession, growth that slow would almost certainly be enough to sink Trump, given his underlying unpopularity."

Previous data had already indicated that the manufacturing sector itself was in a "technical recession."

It's important to point out, as I often did when the economy was showing signs of strength, that a president doesn't directly control the nation's unemployment rate or growth. Some policies also take a while to come into effect, as well, so it can be unwise to make a decisive claim about a president's economic impact too early. That said, most experts seem to believe Trump has been actively hurting the country with his unilateral tariffs, and the president himself has consistently boasted about his supposedly positive impacts on the economy. Should those fail to materialize, it's fair to blame him for it.

And whether it's a fair standard to hold Trump to or not, it's simply a widely acknowledged fact that the economy's performance heading into an election year is a major factor in the presidential race.