Trump faces fewer chances to bolster economic argument

President Trump is facing a closing window to sell Americans on the economic recovery from the COVID-19 pandemic.

With just one more monthly jobs report set to be released before Election Day, the president has less than eight weeks to convince swing voters that he can usher the U.S. back to the strong economy it enjoyed before the coronavirus recession.

The labor force has gained back about half of the more than 20 million jobs lost after the onset of the pandemic. The unemployment rate is now down to 8.4 percent in August after skyrocketing to 14.7 percent in April.

Trump and his top advisers have eagerly touted the recovery of the labor market throughout the summer, unleashing a flurry of tweets and staging White House press conferences to emphasize their optimistic outlook.

Even so, economists warn that the deep economic damage wrought by the pandemic and slowing pace of the recovery could overshadow solid national data among critical voters, particularly if there isn’t any more financial relief coming from Washington.

“Congress needs to take its eyes off the stock market and focus more on the people who elected them. They are still hurting and need support for the basics of food and shelter,” wrote Diane Swonk, chief economist at Grant Thornton, in a Tuesday report.

The strong pre-pandemic economy was considered one of Trump’s most compelling edges heading into 2020. The unemployment rate had sunk to a 50-year low of 3.5 percent, inflation was low and wage growth had inched up above a 3 percent annual rise at the start of the year.

But the onset of the coronavirus pandemic derailed that pitch when it caused the steepest and quickest economic collapse since the Great Depression.

The unemployment rate spiked to a post-Depression high of nearly 15 percent in April, which the Bureau of Labor Statistics said was likely closer to 19 percent if accounting for misclassification errors caused by the pandemic. Gross domestic product also fell at an annualized rate of nearly 32 percent in the second quarter, meaning the U.S. economy would have shrunk by a third if that pace continued for 12 months.

While the pandemic has had a dismal impact on the U.S. economy, it did little harm to Trump’s economic record among voters. An average of polls compiled by RealClearPolitics shows 49 percent of voters approving of his handling of the economy, better than his 44 percent overall approval rating. Several recent polls of battleground states show Trump and former Vice President Joe Biden, his Democratic challenger, fairly close among voters when asked who would be best for the U.S. economy.

“It’s less about the headlines and it’s mostly about their own economy, about their own financial situation,” said Moody’s Analytics chief economist Mark Zandi, referring to the monthly employment report.

Zandi added that a bad jobs report “might make it easier for people who sense that the economy is struggling to come to that conclusion. But at the end of the day I think it’s their own personal financial situation that matters to them, not the aggregate statistics.”

With an improving economy and resilient polling at his back, Trump is seeking to close in on Biden by touting the success of the recovery. The president held a press conference on Labor Day ostensibly to tout the August jobs report, which showed a gain of 1.4 million jobs, and spent much of the holiday weekend claiming that Biden would upend that progress.

“Biggest & Fastest Financial Recovery In History. Next year will be BEST EVER, unless a very Sleepy person becomes President and massively raises your taxes — In which case, CRASH!” Trump tweeted Monday.

A particularly good or bad September jobs report may move the needle among swing voters in Pennsylvania, Wisconsin, Michigan and Florida — four states Trump won in 2016 but where Biden has led in recent polls. The next jobs report, set to be released on Oct. 2, will be the country’s final official read on unemployment before heading to the polls.

“That’s right after the first debate,” currently scheduled for Sept. 29, “coming right into the teeth of the election, and that could influence people,” Zandi said.

Even so, the month in between the September jobs report and the Nov. 3 election is still laden with risks for the economy — and Trump’s reelection prospects.

Despite four months of improvement, U.S. employment is still 11.5 million workers below its pre-pandemic level. Economists are also concerned that a two-month stalemate over further fiscal aid could undercut the slowing recovery as the U.S. reaches its maximum economic potential amid a pandemic that stifles activity.

In a Census Bureau survey conducted the final week of July, 51 percent of American households reported a loss of employment income, 12 percent said they were suffering from food scarcity and a staggering 26 percent reported housing insecurity.

“The bottom line, then, is that the August employment report does not change the underlying picture of an economy struggling mightily in the face of the Covid crisis. The need for further fiscal stimulus is acute if the post-vaccine economy is not to look like a wasteland, with tens of thousands of small consumer-dependent businesses gone for good,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Tuesday research note.