Bank of America says the odds of a recession in the next year are greater than 30 percent. Goldman Sachs says the recession risk is rising because of President Trump’s trade war. Morgan Stanley says a further ratcheting up of Trump’s China tariffs could lead to a global recession.
A looming recession is not yet the consensus of economists, but the doom-and-gloom predictions are increasing as the trade war becomes more pitched and the odds of a resolution before the 2020 election appear longer and longer. Washington Post columnist Robert J. Samuelson recaps many of the ways in which things appear to be headed in the wrong direction.
But however likely you think it is, this inescapable fact remains: Politically speaking, the trade war is a highly suspect and perhaps unnecessary wager for Trump to be doubling down on right now. Trump is taking what is almost inarguably his biggest asset in 2020 — the economy — and throwing a whole bunch of uncertainty into it.
And it’s difficult to overstate the potential implications. Here are a few historical facts:
- Since the Civil War, only one president has won reelection with a recession occurring in the final two calendar years of his first term: William McKinley in 1900.
- Since then, all four presidents running for reelection who had such a recession lost: William Taft, Herbert Hoover, Jimmy Carter and George H.W. Bush.
- Over the same span, all 10 who have sought reelection without such a recession have won: Woodrow Wilson, Franklin D. Roosevelt (3x), Dwight D. Eisenhower, Richard M. Nixon, Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama.
- When you include all presidential elections (and not just presidents seeking reelection), the party in power has lost 13 of the last 19 races in which there was such a recession.
- Of the last 21 races without such a recession, the president’s party has won 16 of them.
Here are the elections in which there was a recession in the two years preceding the election (with a hat-tip to Bruce Mehlman, who has done a similar breakdown):
As with all historical comparisons involving presidential elections, we’re dealing with a limited data set and a whole lot of independent variables, so we shouldn’t draw too many hard-and-fast conclusions. For example, while McKinley is the only president who was reelected, we had a couple of others who ascended to the presidency after serving as vice president and then won the next election in their own right, despite a recession: Theodore Roosevelt in 1904 and Calvin Coolidge in 1924.
But it’s also important to look at the context. Recessions were extremely common between the Civil War and the Great Depression — occurring before all but three elections — but they are considerably less common now, and the pattern has become more pronounced. We have only five examples since the Great Depression began, for instance, and the party in power has lost all five. Over that same span, all nine presidents to run for reelection without a recession have won.
And a recession for Trump would seem particularly damaging. His approval rating already languishes in the low to mid-40s, even with a strong economy and an unemployment rate at 3.7 percent. Some polls have shown a majority of Americans approve of his job performance on the economy, but he seldom cracks 50 percent on any other issue. Most experts put his reelection hopes somewhere around 50-50 or less.
We’re so polarized that a slight downturn in the economy might not cost him a huge amount of support — especially if he can persuade his supporters to blame the Federal Reserve or that the trade war is worth the momentary economic pain — but he simply can’t afford to lose much support, period. At this point, if the economic forecasters are even in the right ballpark, it’s a huge risk Trump is taking.