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Issues & Insights
Michael Candelori

It’s The Economy, Stupid

A little more than three years ago, Moody’s Analytics chief economist Mark Zandi predicted that a Trump presidency would cause the economy to spiral into a recession. This week, Zandi is predicting that the strong economy could all but assure a Trump reelection. No wonder Democrats avoid the topic like the plague.

“It’s pretty clear that everyone would end up in a pretty bad place,” is how Zandi described life under President Donald Trump in June 2016. That was assuming Congress enacted Trump’s agenda, which Zandi said was highly unlikely. Zandi wasn’t alone, of course. He is, in fact, the epitome of conventional economists.

Well, Trump got his agenda enacted. But somehow that recession never came about. And when Zandi put the relevant economic numbers into Moody’s presidential election models – which have accurately forecast every election since 1980 except the one Trump won – lo and behold, they predicted a Trump reelection under each of the three models it uses.

One of them focuses on pocketbook issues such as personal income, gas prices and home prices. It found that Trump would win with 351 electoral votes – 47 more than he captured in 2016.

Another uses the stock market, which includes changes in real personal incomes “but is largely dominated by projections for the Standard & Poor’s 500 stock index.” It has Trump winning with 289 electoral votes to the Democrat’s 249.

The third focuses on unemployment, which looks at state-by-state job data. “The jobless rate is a crucial economic indicator because, just like gasoline prices and other facets of one’s personal finances, it is highly visible and deeply felt,” Zandi explains.

That one has Trump beating a Democratic opponent by a comfortable 332 to 206 electoral votes.

“Under the average of the three models,” the report says, “Trump would hold on to key industrial Midwest states and pick up New Hampshire, Virginia, and Minnesota.”

This assumes an average turnout. If turnout is higher than normal, the results become less clear.

And, of course, Moody’s can’t include such variables as a House impeachment vote or a Senate trial, since no president has ever sought reelection under such circumstances.

But as Zandi notes, “The economy may not be top of mind for voters in every election, but it is hardly ever further than a close second.”

When Bill Clinton was running for president in 1992, his campaign famously came up with the line “It’s the economy, stupid” to keep everyone focused on that issue. Back then, of course, Clinton was trying to portray the economy as being in the midst of a Depression-level collapse – a lie conveniently amplified by the mainstream press.

Now it should be the rallying cry for the Trump campaign.

It will be up to the president to keep selling the message that his policies are working pretty much just as he predicted, and certainly far better than the Mark Zandis of the world expected.

Trump does have a lot to brag about.

As Steve Moore has been pointing out recently, median household incomes have shot up by more than $5,000 just since 2017, which is far more than they climbed during the entire 7½ years after the recession ended under President Barack Obama.

“This is a bonanza for the middle class, and the extra income in tens of millions of Americans’ pockets is getting spent. Consumers are king in America today, and fatter wallets translate into more store sales. Home Depot and Lowe’s recently recorded huge sales surges,” he wrote in his latest column.

An intriguing article by Cincinnati Enquirer columnist Jason Williams shows how strong a case Trump has in many parts of the country. Williams went back to his poverty-stricken hometown of Gallipolis in southeast Ohio – 125 miles south of where the last Democratic debate was held.

Williams found, seemingly to his chagrin, that “the residents have optimism like I haven’t seen in a long time. Gallia County’s unemployment rate is 5.6%, the lowest it has been since 1979. Most of the storefronts in Gallipolis again have businesses.”

In focusing on the economy, Trump should consider dusting off another famous election motto. This one from President Ronald Reagan, in which he asked voters, “Are you better off than you were four years ago?”

Even most of Trump’s most virulent haters will have to admit that the answer is yes.

— Written by John Merline


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