As April began and Americans were being told to fear COVID-19 and stay home, President Trump said there would not need to be a “massive recession.” As recently as Monday he said the economy would have “a tremendous third quarter.” By Wednesday, he was looking forward to “a fourth quarter that’s going to be fantastic” and then to “a tremendous 2021.”
The moving time frame for the hoped-for recovery reflected a shifting of the president’s rhetorical gears now that the recession has hit with hurricane force. The devastating numbers now emerging — including that 30 million have applied for unemployment in the past six weeks — have the White House eager to move from containing the virus to containing its damage to the economy.
The first shuttering of businesses and workplaces in March was enough to drag down economic growth for the whole first quarter by 4.8% (as an annualized rate), by the administration’s own numbers. And forecasters at the non-partisan Congressional Budget Office this week said the second quarter could see the economy shrink by 30% or more.
The receding date of arrival for Trump’s self-described “rocket ship” recovery is all the more notable given his tendency and talent for putting the best face on things. And the need for positive thinking could scarcely be greater than it is now.
The president and his team are arguing that the COVID-19 crisis has peaked and will subside as a threat to public health. But they know the economic fallout from the disease (and a worldwide oil price collapse) has only begun – and that may well be the greater threat to the president’s political health.
Scholars and political strategists generally agree there is nothing more important for a president’s re-election prospects than the state of the economy. Presidents with a robust economy routinely win a new term. Those without, as a rule, do not.
In an article published in mid-March by the University of Virginia, political scientist Alan Abramowitz said a recession in the second quarter would point to defeat for Trump, or any incumbent president — possibly a defeat of “landslide proportions.”
“The performance of the economy in the second quarter seems to shape opinions of the economy in the fall,” wrote Abramowitz, who teaches at Emory University in Atlanta. Abramowitz’s predictive model prominently features second-quarter economic performance among its elements, and it has correlated remarkably well with presidential outcomes since World War II.
We may have forgotten the significance of recessions in part because the last three presidents (Barack Obama, George W. Bush, Bill Clinton) all won a second term after avoiding a recession in the latter half of their first. That allowed each of them to point to improving economic conditions and to do so plausibly and persuasively.
In the most recent example, Obama could point to three years of growth out of the deep recession of 2008-2009, brought about by the mortgage-and-credit crisis and market collapse of 2008.
At the time of Obama’s re-election in 2012, it was often said that no president had been re-elected with unemployment as high as it (still) was in that year. Statistically, that was true, but the sense of upward trajectory, reflected in crucial consumer confidence numbers that fall, buoyed the incumbent.
There were signs this week that Trump is preparing to adopt a similar strategy. In this formulation, instead of downplaying the negative, the president would be cast as the leader most equipped and best positioned to turn things around.
The next best thing to good times may be a promise of good times ahead with the right hand on the tiller. But as a campaign theme, this one’s track record is mixed. “Prosperity is just around the corner” was a slogan for President Herbert Hoover in 1932 in the depths of the Great Depression, just before he was crushed by Franklin D. Roosevelt.
While Hoover’s predicament may have been uniquely hopeless, other incumbents have had also struggled when re-election campaigns had to coincide with weak or recessionary economies.
Much depends on when a recession begins or when it has ended. There needs to be time for the recovery to take hold, to move beyond technical measurements to a general sense of confidence. That is especially true in the current economy, 70% of which is consumer spending.
Feelings of confidence may have been the critical issue for the last U.S. president who was denied a second term, George H.W. Bush. A recession in late 1990 and early 1991 had long been over by Election Day, a fact the Bush team kept trying to drive home. But the downturn was worse and more persistent in some critical swing states, and its hangover (including relatively high unemployment into the second quarter of 1992) haunted the Bush campaign all year.
In one sense, the first president Bush should have known better. He had been the Republicans’ running mate in 1980 when Ronald Reagan won 44 states asking people “are you better off than you were four years ago?”
The target of that simple question had been President Jimmy Carter, who was looking at a worsening job picture with historically high interest rates that had been imposed in an effort to curtail historically high inflation.
Carter himself had reached the Oval Office four years earlier talking about the “misery index” of unemployment, high interest rates and inflation. That combination had been too much for the incumbent of that time, Republican Gerald Ford.
A few presidents have survived poor economic conditions that ended in time for them to recover (Calvin Coolidge in 1924) or began too late for the full force to be felt by Election Day (Harry Truman in 1948). William McKinley was re-elected in what was at least a weak economy in 1900.
But this is where historical arguments can begin. Did McKinley defy the economic imperative in 1900 or ride the popularity of the American victory in the Spanish-American War? Or was it the weakness of his Democratic opponent, William Jennings Bryan?
Was Coolidge spared in 1924 because the Democrats took weeks to choose a nominee against him? Did Truman win in 1948 because the recession had just begun or because people did not blame him for it or because Republican nominee Thomas E. Dewey scarcely campaigned?
These questions are not only of historical interest. All predictions regarding the effect of the COVID-19 economic collapse on Trump’s prospects must also consider other factors. In this case, will the Democrats’ perennial disunity and the lack of a traditional convention sap their voters’ enthusiasm? Will the virus be around and playing hob with turnout rates in November?
Even more worrisome for Trump’s opponents are the travails of Joe Biden’s campaign. A sexual assault accusation and attacks speculating about the 77-year-old’s health have clouded his campaign since he secured an apparent first-ballot nomination earlier this spring.
In the extraordinarily volatile environment of this pandemic-election year, even a nightmare economy may not be as fatal for the incumbent as it would have been in the past.
Calm before the storm for Japan suicides as coronavirus ravages economy – The Province
“There are so many people who want to connect and talk to somebody, but the fact is we can’t answer all of them”
TOKYO — The phones at the Tokyo suicide hotline start ringing as soon as it opens for its once-weekly overnight session. They don’t stop until the lone volunteer fielding calls from hundreds of people yearning to talk signs out early the next morning.
Both operating days and volunteer numbers at the volunteer-run Tokyo Befrienders call center have been cut to avoid coronavirus infection, but the desperate need remains.
“There are so many people who want to connect and talk to somebody, but the fact is we can’t answer all of them,” center director Machiko Nakayama told Reuters.
Health workers fear the pandemic’s economic shock will return Japan to 14 dark years from 1998 when more than 30,000 people took their lives annually. With the grim distinction of the highest suicide rate among G7 nations, Japan adopted legal and corporate changes that helped lower the toll to just over 20,000 last year.
Worried the current crisis will reverse that downward trend, frontline workers are urging the government to boost both fiscal aid and practical support.
“We need to take steps now, before the deaths begin,” said Hisao Sato, head of an NGO that provides counseling and economic advice in Akita, a northern prefecture long known for Japan’s worst suicide rate.
National suicides fell 20% year-on-year in April, the first month of the country’s soft lockdown, but experts said that was likely due to an internationally recognized phenomenon in which suicides decrease during crises, only to rise afterwards.
“It’s the quiet before the storm, but the clouds are upon us,” Sato said.
Prevention workers see echoes of 1998 when a sales tax hike and the Asian economic crisis first drove annual suicides above 30,000, then to a peak of almost 34,500 in 2003.
Economic circumstance is the second biggest reason for suicides, behind health, according to 2019 police data, which also shows that men are nearly three times more likely to kill themselves than women, and most are in the 40-60 age group.
The current crisis, which is forecast to shrink Japan’s economy 22.2 percent this quarter, is especially dangerous for cash-strapped small and medium-sized businesses for whom government subsidies might not arrive in time.
“It’s tough. A lot of people are really worried,” said Shinnosuke Hirose, chief executive of a small human resources firm that has lost nearly 90% of its business. “It’s like waiting at the execution grounds to see if they survive or not.”
A Health Ministry official in charge of suicide policy told Reuters his department planned to ask for more money from a $1.1 trillion central government stimulus package to help fund measures such as extra hotlines. The official, who declined to be named as he was not authorized to speak on the record, added there were limits to central government action and local efforts were crucial.
Some believe the steps taken in recent years to bring down the suicide rate will hold firm through the current crisis, but others are not so sure.
Kyoto University’s Resilience Research Unit has predicted 2,400 more suicides for each 1% rise in unemployment. If the virus subsides in a year, unemployment could peak at around 6% by March, lifting annual suicides to around 34,000, it estimated. If pandemic conditions persist for two years, a rise to 8% unemployment by March 2022 would see suicides spike over 39,000.
“Of course social support is important … but they won’t be able to ramp this up suddenly,” said unit director Satoshi Fujii. “Preventing bankruptcies will start helping immediately.”
At the Tokyo Befrienders call center, the phones continue to ring. The formerly nightly service now opens on Tuesdays only, with one volunteer a shift instead of four, although it plans to reinstate another day in June.
“Everyone has tried hard to get through lockdown, but now they’ll reflect and think ‘why was I doing it? What hope do I have?’” Nakayama said. “At that time I think a lot could choose death.” (Reporting by Elaine Lies; editing by Jane Wardell)
Trump’s Economy Will Look Better Than You Think On Election Day – Forbes
Here’s some bad news for Democrats intent on unseating the Trump administration. While the current economic situation looks dire, a huge bounce back is forecast for this summer and will likely continue into the fall.
At least 12 economists see the economy growing at an annualized rate of at least 20% in the third quarter. Some even see it growing as fast 30% over the same period, according to a recent survey of multiple economists by The Wall Street Journal.
And it is just that sort of economic snap-back that could put President Trump back in the White House for another four years.
Things Look Bad Now
Currently, it might seem hard to see anything good in line for the Trump administration. Millions of people have been fired in a matter of a few weeks. The economy is expected to shrink by 17% in the three months through June, according to Trading Economics. And the death toll from the Covid-19 pandemic is rising. In short, it’s bad, and everyone knows that fact.
But it is the health of the economy that generally dictates how people vote. If there are plenty of jobs, inflation is low, and people feel better off than they did a four years ago, they’ll likely vote for more of the same. That’s what happened with Presidents Reagan and Clinton. Some readers will remember Clinton’s early 1990s campaign quip, “It’s the economy stupid.” That was true then and still is now.
The economic data from the last few weeks are so bad that Democratic Party operatives may be banking on the dire economy to ensure a landslide victory in the fall election. But that hope may soon evaporate as we enter the summer.
Economic Bounce Back This Summer
What probably matters more for many voters is what will happen in the few months before the November election, not the current situation. And that could surprise the world.
Ameriprise Financial AMP and Nomura Securities International both see an annualized growth rate of 30% in the three months through September, according to the WSJ survey. Another 10 similar institutions, such as CSFB, Scotiabank BNS and Natwest Markets, forecast the economy will expand by between 20% and 30%.
Other institutions see lower rates of growth and perhaps even continued contraction. The average growth estimate for the third quarter is around 9%, according to the WSJ survey.
However, as long as the lockdowns continue to get loosened, then growth estimates should continue to rise.
Normally an annualized growth rate of 3% would be considered a good reading and would likely come side-by-side with the sustained creation of millions of new jobs each year.
But growth rates of 20-30% are spectacular. Even 9%, the average second-quarter forecast, would be shockingly high in normal times. What’s more, if these forecasts are even vaguely accurate, the growth should create a load more jobs. Exactly how many is hard to judge because there hasn’t really been a precedent for an economic lockdown.
Growth Boom to Continue Through Year End
There is some more good news. According to the same WSJ report, the growth boom is set to continue in the fourth quarter. The highest estimate is for a bounce of 21.5%, with the average at a respectable 6.9%. Again, that continued growth should create another slew of new jobs, many of which will appear before the election.
So what? The likely rebound in economic growth could also help tilt the election toward incumbent President Trump.
A second Trump term could also be a further bullish factor for the stock market because of the administration’s decidedly pro-business approach to the economy and his effort to reduce regulations. In other words, investors should be watching this closely.
Doug Ford rejects regional approach to reopening Ontario's economy – Toronto Star
One size fits all.
That will be Ontario’s mantra for reopening the economy in the wake of the COVID-19 pandemic, insists Premier Doug Ford.
Even though the Greater Toronto Area accounts for 65.6 per cent of Ontario’s cases, leaving huge swaths of the province relatively unscathed, Ford is rejecting the regional approach of opening up as is being done in neighbouring Quebec, Manitoba and New York state.
“I have to follow science and the medical advice. I always have, I always will,” the premier said Thursday, emphasizing that provincial chief medical officer of health Dr. David Williams and other public health officials will make the call.
“I’ll take their advice and if Dr. Williams doesn’t think it’s the right thing to do, then I’m following his advice. I have from the beginning. I’ll continue to follow it,” he said.
Ford admitted he is under a lot of pressure to expedite the opening of the economy in regions beyond the GTA.
There are far fewer coronavirus cases in Kenora, Algoma, North Bay, Parry Sound, Sudbury, Kingston, Renfrew, Huron-Perth, Prince Edward County, and most of southwestern Ontario outside the Windsor city limits.
“I hear it at cabinet, I hear it at caucus. I hear it all the time from our own members,” the premier said.
Indeed, Progressive Conservative MPPs from outside the Golden Horseshoe privately confide that they are feeling heat from their constituents.
“How am I supposed to keep telling businesses in my area to remain closed for what’s essentially a Toronto problem?” said one rural Tory MPP, speaking on condition of anonymity in order to freely discuss internal caucus discussions.
“At a certain point, we’ve got to reopen,” added the MPP, who personally lobbied Ford against the universal reopening approach.
But the premier, who began the first phase of reopening the economy last week when stores with street-front entrances were allowed to welcome customers, said “we just have to be cautious” to curb the spread of a virus that has killed 2,248 people in Ontario.
“On a long weekend in the summer, there’ll be half a million cottagers going up to the Muskokas, the Haliburtons, up to the cottage area — and they’re coming, primarily, they’re coming from the 905 and 416 area,” he said.
In Quebec, where 4,228 people have died from COVID-19, Premier François Legault has pushed a phased regional approach to opening.
Outside of Montreal, the epicentre of the pandemic in that province, much of the economy will be up and running next week, including indoor shopping malls.
“We have to continue to be careful because we cannot afford to have large increases in the next few days or weeks in the number of people in our hospitals in Montreal,” Legault said earlier this week.
In Manitoba, where only seven people have died of COVID-19, Premier Brian Pallister announced Tuesday that most businesses — including restaurants, bars, and gyms — will be open next week.
Pallister stressed “slow and careful movement in the direction of easing our restrictions is the right approach.”
New York state has suffered 23,282 deaths — more than 10 times as many as Ontario despite a population of 19.5 million compared to the province’s 14.5 million — but is pushing forward with phased regional reopening.
In New York, a region must meet seven different metrics before being allowed to move a broader stage of reopening, including a sustained decline in total hospitalizations over a three-day rolling average and a decline in deaths.
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Each region must have at least 30 per cent of its intensive care unit beds and 30 per cent of all hospital beds open and must meet diagnostic testing and contact tracing capacity.
Western New York, across the Niagara River from Ontario, currently meets all seven requirements for reopening selected businesses and services.
Earlier this month, Gov. Andrew Cuomo defended his plan.
“Close down everything, close down the economy, lock yourself in the home — you can do it for a short period of time, but you can’t do it forever.”
JOIN THE CONVERSATION
What do you think of the “one size fits all” strategy for reopening Ontario’s economy?
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