President Trump has an impressive defense for why he shouldn’t be impeached: The economy is just too darn good!
Of course, Trump suggests periodically that some good economic indicator insulates him from noneconomic failings (standard talking point: He can’t possibly be racist because unemployment for African Americans and Hispanics is low). So perhaps this latest development is unsurprising.
Still, the founders did not include a “strong economy” exemption for impeachment proceedings. If so, that would certainly be news to Bill Clinton. But let’s assume it’s buried somewhere deep in Article XII, and only Trump has been able to verify its existence. How is the economy doing?
In fact — aside from his ongoing, live-on-TV requests for even more foreign powers to investigate his political rivals — the sputtering economy could now be the single greatest threat to Trump’s ability to weather impeachment.
First things first: As I’ve noted before, presidents don’t control economies. Voters often attribute economic developments to the president’s wisdom (or folly), but big macro trends are largely determined by factors outside presidents’ power. At best, they can usually affect things on the margins, in the short run.
That said, Trump likes to claim credit for the supposedly best-ever economy — even though on most major metrics, the overall economy is not appreciably different today than it was under his predecessor, Barack Obama.
If you look at, say, hiring or output growth, trends have been more or less the same until recently. In the first 32 months of Trump’s presidency, payroll growth averaged 191,000 jobs per month , not so different from the 223,000 per month in the last 32 months of Obama’s presidency. (The forecast for the September jobs report due out Friday is about 140,000.)
Trump did get a short-lived bump in gross domestic product growth in 2018, but that sugar-high appears to have worn off. GDP growth in 2019 is now predicted to revert to roughly the same pace averaged in the several years preceding Trump’s tax cut.
Lately, more forward-looking indicators suggest things could soon get materially worse — foretelling a “grinding slowdown,” as Pantheon Macroeconomics chief economist Ian Shepherdson puts it, if not a full-blown recession.
This week, for instance, we learned that the manufacturing sector contracted for the second straight month, with the Institute for Supply Management’s manufacturing index notching its lowest reading since the Great Recession. Other metrics also imply that manufacturing is already in recession. Plus the ISM’s index for the services sector, which should be more insulated from Trump’s trade war, just registered its lowest level in three years.
A number of “softer” measures are also slumping — including confidence levels for chief executives and chief financial officers, which are at multiyear lows. The initial consumer sentiment imprint for September looks a touch better than it was for August, but it’s still down nearly 7 percent from a year earlier. Some other leading consumer indicators, such as whether Americans say now is a “good” time to buy major household items, such as a refrigerator or TV, have been plummeting.
Business investment, which the tax cut was supposed to permanently increase, instead shrank in the most recent reading; Shepherdson told me he expects further contraction ahead.
How much of this can you actually blame on Trump?
Like I said: He has limited control. Many of the biggest global risks threatening the U.S. economy — including Brexit and the China slowdown — are beyond his reach, even if he does seem to be cheering them on. The record for longest U.S. economic expansion has already been broken, suggesting that a downturn might be statistically overdue, regardless of who was in office.
To the extent that Trump does exert influence on the U.S. economy, though, he isn’t helping things.
Not through his trade wars, which are raising costs and uncertainty, and punishing farmers caught in the crossfire. Not through his administration’s conspicuous incompetence. Not through his attacks on Federal Reserve independence. And not by frittering away deficit-financed fiscal stimulus when the economy needed it least.
Perhaps Trump wasn’t completely wrong in identifying a link between the economy and impeachment: There is a political, if not exactly a constitutional, connection. So long as the public still views the economy (and Trump’s handling of it) favorably, members of his own party will continue to defend his most egregious transgressions. But if the economy continues to weaken — thanks in part to Trump’s own actions — GOP backbones might yet strengthen.