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| Why a B-Minus Economy May Be Causing a Turbulent Election | Why a B-Minus Economy May Be Causing a Turbulent Election |
| (1 day later) | |
| The boring economy seems to be making this presidential race even more exciting. And uncertain. | The boring economy seems to be making this presidential race even more exciting. And uncertain. |
| The economy has reliably been one of the most important factors influencing a presidential election. A strong economy helps to keep the party in power in power. A weak economy tends to cause voters to want to change the residents of the White House. | The economy has reliably been one of the most important factors influencing a presidential election. A strong economy helps to keep the party in power in power. A weak economy tends to cause voters to want to change the residents of the White House. |
| But right now, the economy could be best described as moderately, perhaps deceptively, successful. | But right now, the economy could be best described as moderately, perhaps deceptively, successful. |
| Growth is lukewarm, but it has been consistent enough to create hundreds of thousands of new jobs. Wages have not risen by much, and the uneven recovery has left segments of the population behind. But the overall unemployment rate is down to 5 percent. That’s unusual for a presidential election season — it has been at 5 percent or lower in only three of the 14 contests that have taken place since 1960. | Growth is lukewarm, but it has been consistent enough to create hundreds of thousands of new jobs. Wages have not risen by much, and the uneven recovery has left segments of the population behind. But the overall unemployment rate is down to 5 percent. That’s unusual for a presidential election season — it has been at 5 percent or lower in only three of the 14 contests that have taken place since 1960. |
| The quiet strength of the economy appears to be affecting the campaign. It’s far easier for candidates to make economic policy messages resonate when the economy is roaring: the elections of 1996 (Dole vs. Clinton) and 2004 (Bush vs. Kerry). Or when the economy is in the doldrums: 1992 (Bush vs. Clinton). Or when it’s facing threats: (high inflation for Reagan vs. Carter in 1980 and a global financial meltdown for McCain vs. Obama in 2008). But when it’s middling? | The quiet strength of the economy appears to be affecting the campaign. It’s far easier for candidates to make economic policy messages resonate when the economy is roaring: the elections of 1996 (Dole vs. Clinton) and 2004 (Bush vs. Kerry). Or when the economy is in the doldrums: 1992 (Bush vs. Clinton). Or when it’s facing threats: (high inflation for Reagan vs. Carter in 1980 and a global financial meltdown for McCain vs. Obama in 2008). But when it’s middling? |
| As the political scientist Lynn Vavreck, an Upshot contributor, has pointed out, people are generally not angry about the economy, at least by historical standards. Donald Trump and Bernie Sanders will certainly keep highlighting what they see as big weaknesses in the economy, and Hillary Clinton will keep talking about how she would improve it. But if most voters are doing sort of O.K., this approach may have a limited impact. | As the political scientist Lynn Vavreck, an Upshot contributor, has pointed out, people are generally not angry about the economy, at least by historical standards. Donald Trump and Bernie Sanders will certainly keep highlighting what they see as big weaknesses in the economy, and Hillary Clinton will keep talking about how she would improve it. But if most voters are doing sort of O.K., this approach may have a limited impact. |
| Indeed, the lack of stark economic problems may have allowed Mr. Trump to push unconventional policies. If the economy were repeating the plunge of 2008, fewer voters might be prepared to support a candidate whose policies would disrupt world trade and whose tax cuts would almost certainly lead to a far bigger budget deficit. And the advances in the economy make it harder for Mr. Sanders to further tap discontent over issues like income inequality. | Indeed, the lack of stark economic problems may have allowed Mr. Trump to push unconventional policies. If the economy were repeating the plunge of 2008, fewer voters might be prepared to support a candidate whose policies would disrupt world trade and whose tax cuts would almost certainly lead to a far bigger budget deficit. And the advances in the economy make it harder for Mr. Sanders to further tap discontent over issues like income inequality. |
| The B-minus economy will also pose a challenge to whomever wins the White House in November. | |
| A new president might be tempted to try bold, new policies to obtain an extra point of economic growth and spread wealth more evenly. But if there is a chance the economy is going to gradually pick up pace on its own, why risk big disruptive initiatives or squander political capital getting expensive campaign promises through Congress? Why unsettle a stock market that is in its second-longest bull run since the 1930s? (The longest was the 113-month bull market from 1990 to 2000.) | A new president might be tempted to try bold, new policies to obtain an extra point of economic growth and spread wealth more evenly. But if there is a chance the economy is going to gradually pick up pace on its own, why risk big disruptive initiatives or squander political capital getting expensive campaign promises through Congress? Why unsettle a stock market that is in its second-longest bull run since the 1930s? (The longest was the 113-month bull market from 1990 to 2000.) |
| A heavy caveat is necessary: The economy may weaken — and the stock market may drop — by the time of the election. Problems in large economies around the world could weigh on the United States. And confidence here and abroad could plummet if Mr. Trump appears to have a good chance of winning and he is still pushing policies that could set off a trade war with China or cost taxpayers huge sums, like mass deportations and construction of a border wall. | A heavy caveat is necessary: The economy may weaken — and the stock market may drop — by the time of the election. Problems in large economies around the world could weigh on the United States. And confidence here and abroad could plummet if Mr. Trump appears to have a good chance of winning and he is still pushing policies that could set off a trade war with China or cost taxpayers huge sums, like mass deportations and construction of a border wall. |
| Still, if the economy holds, campaign analysts will be scraping around for precedents. | Still, if the economy holds, campaign analysts will be scraping around for precedents. |
| George H.W. Bush won in 1988 against Michael Dukakis by promising to take the country on much the same course as President Reagan did. But while the economy has achieved steady gains under President Obama, Mrs. Clinton might not gain a big advantage by portraying herself as his economic standard-bearer. The economy just hasn’t been growing fast enough. Economists expect the economy to grow at around 2 percent this year. In the second half of 1988, it grew at nearly double that rate. | George H.W. Bush won in 1988 against Michael Dukakis by promising to take the country on much the same course as President Reagan did. But while the economy has achieved steady gains under President Obama, Mrs. Clinton might not gain a big advantage by portraying herself as his economic standard-bearer. The economy just hasn’t been growing fast enough. Economists expect the economy to grow at around 2 percent this year. In the second half of 1988, it grew at nearly double that rate. |
| The only years since 1960 when the economy was growing at more than 2 percent and unemployment was at 5 percent or lower at the time of the election are 1964 (Goldwater vs. Johnson), 1968 (Nixon vs. Humphrey) and 2000 (Bush vs. Gore). But the contests of 1964 (the perception that Barry Goldwater was extreme) and 1968 (Vietnam and social disruption) were heavily influenced by noneconomic factors. The 2000 election, which occurred as a big speculative bubble in the stock market and the technology sector was deflating, also lacks strong parallels to today. | The only years since 1960 when the economy was growing at more than 2 percent and unemployment was at 5 percent or lower at the time of the election are 1964 (Goldwater vs. Johnson), 1968 (Nixon vs. Humphrey) and 2000 (Bush vs. Gore). But the contests of 1964 (the perception that Barry Goldwater was extreme) and 1968 (Vietnam and social disruption) were heavily influenced by noneconomic factors. The 2000 election, which occurred as a big speculative bubble in the stock market and the technology sector was deflating, also lacks strong parallels to today. |
| The best comparison might be the 2012 election. While unemployment was nearly 8 percent at the time, and economic growth was anemic, jobs growth had picked up. But in that election year, the Federal Reserve kept its foot firmly on the monetary policy pedal. This helped ensure momentum in the economy continued through the presidential contest and after. The Fed isn’t slamming on the brakes right now, but it is expected to raise interest rates this year, perhaps even before the election. | The best comparison might be the 2012 election. While unemployment was nearly 8 percent at the time, and economic growth was anemic, jobs growth had picked up. But in that election year, the Federal Reserve kept its foot firmly on the monetary policy pedal. This helped ensure momentum in the economy continued through the presidential contest and after. The Fed isn’t slamming on the brakes right now, but it is expected to raise interest rates this year, perhaps even before the election. |
| The Fed’s hope is that the economy will keep growing steadily without a big helping hand. And it may. “I think it’s a myth that expansions die of old age,” Janet Yellen, the chairwoman of the Fed, said late last year. The economy has grown in each of the previous six years. | The Fed’s hope is that the economy will keep growing steadily without a big helping hand. And it may. “I think it’s a myth that expansions die of old age,” Janet Yellen, the chairwoman of the Fed, said late last year. The economy has grown in each of the previous six years. |
| Jobs and economic growth will always matter to voters. Whipsaw boom-bust economic cycles of the postwar years played a part in deciding who was president, and the American business cycle hasn’t suddenly gone away. But nowadays there are no big wars to finance, just a few long, grinding commitments; inflation is under control; and the recent overhaul of the financial sector appears to have promoted steady credit growth without creating widespread losses. We may be in an era when politicians cannot make much hay out of the economy. | Jobs and economic growth will always matter to voters. Whipsaw boom-bust economic cycles of the postwar years played a part in deciding who was president, and the American business cycle hasn’t suddenly gone away. But nowadays there are no big wars to finance, just a few long, grinding commitments; inflation is under control; and the recent overhaul of the financial sector appears to have promoted steady credit growth without creating widespread losses. We may be in an era when politicians cannot make much hay out of the economy. |
| If Mrs. Clinton becomes the Democratic nominee and wins in November, it could show that a cautious candidate can do well in a composed economy. True, the lack of drama in the economy may also be helping Mr. Trump run a wrecking-ball campaign by stirring up other issues. But think about it: If there is one force that can derail him, or restrain him, it’s the threat that the economy won’t tolerate his more unconventional policies. | If Mrs. Clinton becomes the Democratic nominee and wins in November, it could show that a cautious candidate can do well in a composed economy. True, the lack of drama in the economy may also be helping Mr. Trump run a wrecking-ball campaign by stirring up other issues. But think about it: If there is one force that can derail him, or restrain him, it’s the threat that the economy won’t tolerate his more unconventional policies. |