Strong economy bolsters Trump heading into 2020

A raft of surprisingly strong recent economic data is likely to bolster President Trump’s case as he heads into the 2020 election.

The U.S. labor market blew past expectations by adding 263,000 jobs in April, with the unemployment rate falling to the lowest level in 50 years, and gross domestic product growth accelerated at a 3.2 percent annual rate in the first quarter.

Financial markets have rebounded to record highs after a bloody end to 2018, while wage growth is slowly increasing after years of near stagnation.{mosads}

Economists had widely expected the U.S. economy to slow this year, with some raising the specter of a potential recession. But those fears have fallen by the wayside, and the strong top-line numbers give Democrats few openings to attack Trump on the state of the economy.

“Markets were wrong about the risks of a recession at the turn of the year. The economy still has significant momentum,” wrote Diane Swonk, chief economist at Grant Thornton, in a Friday research note.

That’s left Democrats looking to unseat Trump instead focusing on the president’s push to roll back regulations, which they argue has left workers with fewer protections, and on wide swaths of the country still struggling to get by.

“Regardless of the economic numbers, most people feel like they’re working harder but not getting ahead,” wrote Zac McCrary, partner at progressive polling firm ALG Research, in a Friday email.

“People don’t vote based on macro-economic metrics – they vote based on what’s happening in their own lives.”

The economy will take center stage in 2020. Trump and congressional Republicans have claimed credit for boosting the economy through massive tax cuts and sweeping deregulation.

When Trump took office in January 2017, he inherited a solid but slowly growing economy from former President Obama. The unemployment rate was 4.7 percent, but GDP grew only 1.6 percent in 2016, the slowest level of economic growth since 2011.

The economy has kicked into another gear since Trump’s election, with unemployment sinking to 3.6 percent in April and GDP growth coming close to 3 percent in 2018.

Trump and Vice President Mike Pence have toured the country to tout the strong economy, frequently in midwestern states that voted for Obama in 2012 but delivered the White House to Republicans in 2016.

Republicans have focused on the combination of a near-record low unemployment rate with quicker GDP and wage growth. The strong April jobs report released Friday by the Labor Department gave Trump new ammunition.

“We can all agree that AMERICA is now #1,” Trump said in a Friday tweet, accompanied by a picture of the Drudge Report homepage touting the April hiring boom. “We are the ENVY of the WORLD — and the best is yet to come!

Democrats, though, argue Obama should get credit for the burst of prosperity. They say the U.S. is finally reaping the full benefits of his efforts to rebuild the economy. Economic analysts say the stimulatory effects of GOP tax cuts and the sharp increase in government spending are likely short-lived.

Even so, Republicans believe the recent spurt of economic growth stands to benefit Trump as he seeks re-election. Polls find Trump broadly unpopular, but they also show the public giving him high marks for his handling of the economy.

Roughly 53 percent of Americans disapprove of Trump’s presidency, according to a FiveThirtyEight average of approval polls updated on Friday. But 56 percent of respondents to a CNN poll said they approved of Trump’s economic record, a new high for his presidency.

“‘It’s the economy stupid’ is still mostly operative,” Stuart Roy, a GOP strategist and former aide to Senate Majority Leader Mitch McConnell (R-Ky.), wrote in an email, citing the unofficial slogan of former President Clinton’s first White House campaign in 1992.

The strong economy wasn’t enough to prevent Republicans from losing their House majority in the 2018 midterm elections. The strong current numbers numbers have 2020 Democrats trying to focus their economic messaging in more nuanced ways.

Democrats have focused on the 2017 tax law, which included a large corporate tax cut that sunk the bill’s popularity.

Liberal critics of the president argued that the cuts favored wealthy individuals and big businesses over middle- and working-class Americans. And there are early signs that the argument could be effective in an election against Trump.

A poll conducted by ALG Research in March found that 75 percent of likely 2020 voters and 60 percent of Republican support raising taxes on the rich, including 60 percent of Republicans.

“Voters do not feel that the Trump tax bill lowered their taxes, in fact many believe their taxes have gone up – while the benefits went to the wealthy and the corporations,” McCrary wrote.

Several 2020 candidates have proposed raising taxes on the wealthy to tackle income inequality and fund several ambitious policy plans.

Presidential candidate Sen. Elizabeth Warren (D-Mass.) outlined a special annual tax on those with a net worth higher than $50 million. Her plan would apply a 2 percent tax each year on net worth between $50 million and $1 billion, and a 3 percent tax above $1 billion.

Sen. Kamala Harris (D-Calif.) proposed a tax credit of $6,000 for every family making less than $100,000 a year. It would be funded by reversing Trump tax cuts for earners making more than $100,000 and imposing a tax on financial institutions with more than $50 billion in assets.

And Sen. Cory Booker (D-N.J.), who is also running for president, has introduced a bill to create a federally funded savings account for every child, funded by boosting the estate tax and capital gains tax.

Democratic candidates have also tried to woo voters attracted to Trump’s populist rhetoric with policies meant to rein in corporate behemoths and unpopular industries.

Warren has proposed a plan to break up the largest tech companies, arguing that they distort markets and exploit working and middle-class Americans.

Several candidates have also embraced an expansion of government health insurance under the umbrella “Medicare for All” to insulate voters from the rising costs of healthcare.

“Healthcare costs are going up for families and Donald Trump is part of the problem,” wrote McCrary. “That message beat dozens of Republicans incumbents in 2018 – can beat Donald Trump in 2020.”

But whether those appeals can overcome a strong economy remains to be seen.

“If Democrats are forced to nitpick prosperity, they are casting their lot with a smaller portion of the public,” countered Roy.