This archive report was first published on 19 July 2019.
The 2020 election is just around the corner, and the economy's performance will undoubtedly play a significant role in shaping the outcome. However, a closer look at the current economic landscape reveals that the growth may not be as robust as it seems.
Despite corporations enjoying increased profits, they have been using the money to buy back their own stock rather than investing in the economy. Wages are rising, but not at an extraordinary pace, and many Americans feel they are not sharing in the benefits of a growing economy.
According to the Federal Reserve Bank of New York, the economy's growth was down to 1.5 percent in the second quarter. It's hard to see where another economic bump can come from, especially with Democrats controlling the House and no possibility of another big tax cut.
Political scientists agree that what matters is the trend, not the level, of the economy. The unemployment rate was still over 7 percent when Ronald Reagan won his 1984 landslide, and it was 7.7 percent when Obama won in 2012. In both cases, however, things were clearly getting better.
That's probably not going to be the story next year. If we don't have a recession, unemployment will still be low, but economic growth will likely be meh at best. This means that the economy won't give Trump much of a boost, and it will be more or less a neutral factor.
On the other hand, Trump's awfulness will remain, and Republicans will likely portray the Democratic nominee as a radical socialist. While this strategy might work, it failed last year in the midterms, and the odds are that Trump's deficit-fueled bump came too soon to do him much good.
