Trump Bets It All On Q3
In recent days, President Donald Trump has been (as he calls it) "cheerleading" the American economy, for three basic reasons. First, to Trump everything is a P.R. problem, at absolute worst. Second, it's all he really knows how to do when it comes to the economy (or anything else, for that matter). And third (and most important to Trump), he knows full well his re-election is going to hinge on whether the voters are going to be feeling any better about the future in November. In particular, Trump has essentially bet all his chips on the third quarter of 2020.
He has no other realistic choice in the matter, since the calendar is going to dictate things. To be sure, Trump is also actively talking up the periods beyond the third quarter of the year, by saying that the fourth quarter will be "tremendous" and that 2021 could be "the best economy ever" as all of that "pent-up demand" skyrockets the American economy back up again. But none of that is going to matter to his re-election effort, because the fourth quarter and all of 2021 are going to happen after people vote.
The White House advisors have all essentially given up on the second quarter, after the first quarter's numbers were so brutal. The gross domestic product shrank by almost five percent, and the unemployment rate last month approached 15 percent -- a number not seen since the Great Depression. And everyone knows these numbers are going to get much worse over the next few months. Trump aides were on television yesterday admitting that the unemployment rate for this month could be "north of 20 percent" or even as high as 25 percent -- which is, incidentally, the highest number ever reached even during the Great Depression. With April and May chalking up such disastrous numbers, the second quarter total is going to be pretty dismal indeed.
The outlook for gross domestic product is even worse. The first quarter's number, as bad as it was, included January and February (before most places began to shut down), after all. But the second quarter began after many states had already instituted shelter-in-place orders. Which has led some economists to predict absolutely staggering losses in G.D.P. for the second quarter -- some as high as 30 percent. This could be the worst economic quarter in all of American history, to put it another way.
Trump knows that he's only got a very short window to show any sort of economic improvement at all before the election -- and before we even get there we'll have to face the final Q2 numbers first. Which is why he's pushing so hard to get businesses up and running right now, so that the Q3 numbers can show some improvement.
Again, this is going to be dictated by the calendar. Monthly unemployment numbers are usually released on the Friday following the end of the month. But the first of November falls on a Sunday this year, so the election will actually happen before the October numbers are released. This gives Trump only five more months of unemployment rate data to work with: May, June, July, August, and September. May's numbers, obviously, are going to be terrible. But if enough people start going back to work before the end of the month, then June's numbers could show some sort of improvement (Trump hopes, at any rate). If this continues, then Trump might have (at best) four months' worth of improvement to point to in November. However, if May's rate falls between 20 and 25 percent (as many are now predicting), there will be a very steep hill to climb to get back to anything even approaching normal -- or even "a normal recession," for that matter.
The quarterly G.D.P. numbers are released at the end of the month which follows the end of the quarter, so we'll all see the third quarter number mere days before the election, at the very end of October. Three things could happen: it could stay roughly the same, it could get better (showing growth instead of contraction), and it could get worse. If it gets better (even marginally), Trump will be touting the number to the skies and trying to convince the voters not to "change horses midstream." If the number gets worse, however, showing continued contraction of the economy, then economists are going to start talking about being in a depression, not just a recession. Technically, a recession is two consecutive quarters of negative growth, while a depression is four or more straight quarters of shrinkage. If the Q3 number is negative, then that will make three quarters in a row.
Of course, much more than the raw numbers, the public's perception will be what really matters. Will everyday life have resurrected some semblance of normalcy by November? That is certainly possible, although in no way guaranteed. The only way this even has a chance of happening is if we don't see a second spike in the spread of the COVID-19 pandemic here. This will only occur if early reopening goes well without spiking the caseload and if the coronavirus doesn't stage a comeback in the fall months. That is what Trump is betting all his chips on, plain and simple. If people are able to go out and shop and do normal things -- even with masks and social distancing -- then they might be inclined to believe that things are getting better and forget all about how much time Trump wasted at the start of the outbreak. If all the trendlines look good, then the absolute values won't matter as much. "Sure, unemployment is still at [let's say] 13.7 percent, but that's a lot better than it was in May!" will be the rallying cry from Team Trump. Barack Obama already negated one political rule of thumb in this regard, by winning re-election when the unemployment rate was still historically high (albeit in single digits), because it had been steadily improving for almost his entire first term. No president since F.D.R. had ever managed to pull off this political feat previously (economic bad news contributed to the defeats of both Jimmy Carter and George H. W. Bush). So Trump might defy this metric as well, even if unemployment is still well into double digits.
As for the G.D.P. numbers, they've always been pretty intangible (as just numbers) to the average voter. More important to them is how they personally feel about the current economy as well as how they feel about the future of the economy. If voters look around their hometown and see things improving and all their friends and relatives getting jobs, then they're likely to feel pretty good about the future no matter what the actual G.D.P. figure is. However, if they don't see such local improvements and they still personally know lots of people out of work and desperately seeking a job, then it doesn't matter how rosy the G.D.P. figure is, voters will still feel pretty pessimistic.
Trump instinctively knows that P.R. is the only thing that can save him, because if he repeats rosy-tinted happy-talk about the economy enough times (and loudly enough), then he just might convince enough people that things will get better real soon now to win re-election, no matter how bad the absolute values of the economic indicators may be in late October. But this risks being seen as woefully out of touch with the reality on the ground for most voters, of course.
Last month's numbers were bad, and this month's numbers are going to be devastatingly, historically horrendous. Even the White House now admits this reality. What happens next, all throughout the third economic quarter of the year, is what is going to determine if Donald Trump has even a prayer of being re-elected. And for now, things are going to get a lot worse before they even begin to get any better.
-- Chris Weigant
Follow Chris on Twitter: @ChrisWeigant
It sure was obvious what he was trying to accomplish with this presser. Too bad he had a hissy fit at the end of it.
In particular, Trump has essentially bet all his chips on the third quarter of 2020.
Now, if he were to start listening to the WHO, in general and to today's WHO presser, in particular, then he would know how to work toward a recovering economy.
To be sure, Trump is also actively talking up the periods beyond the third quarter of the year, by saying that the fourth quarter will be "tremendous" and that 2021 could be "the best economy ever" as all of that "pent-up demand" skyrockets the American economy back up again. But none of that is going to matter to his re-election effort, because the fourth quarter and all of 2021 are going to happen after people
Well, I think he's trying to get people to look optimistically forward to 2021 NOW! And, he trying to make people think that they know when they vote that Trump is the one working towards that outcome.
And, did you notice that Trump quickly warned that the Democrats, if they get elected in November, will raise taxes and prevent that great economic recovery!
Trump knows that he's only got a very short window to show any sort of economic improvement at all before the election -- and before we even get there we'll have to face the final Q2 numbers first. Which is why he's pushing so hard to get businesses up and running right now, so that the Q3 numbers can show some improvement.
Ironically, while Trump may be this novel coronavirus's best friend, the virus won't be doing him any favours on the economic front if he keeps thinking magically. So much for loyalty! :)
He's fleein' the press conference!
What movie does that remind of?
How about,
He's fleein' the press conference! He's fleein' the press conference!!
Oh, my God, that's just too funny. Ahem.
um... fargo? yaaa.
oh, for pete's sake...
https://youtu.be/CoxRmwaLBOQ
and a timeless beauty for CW:
Things are going to get a lot worse before they get worse.
~lily tomlin
oh, for pete's sake...
Heh. I think I'll watch it tonight, again. Just because.
The economy is not likely to come roaring back. Four reasons:
1) Many people will still be leery of going to restaurants and bars and theaters and flying to vacation spots.
2) And as far as the businesses they do patronize, they will have a lot less money to spend there.
3) Many consumers will have realized they don't need to eat as much meat or buy so many fancy clothes.
4) Many businesses have learned to operate with people working from home. As a result, many of those businesses will have realized they don't need to maintain so much office space, to the detriment of commercial real estate and also to the detriment of businesses such as coffeeshops and restaurants that serve commercial areas.
In short, the old economy won't come roaring back because it won't be the same economy any more; the model will have changed.
Chris,
Not sure what this means but, I would bet that it ain't good …
https://www.justice.gov/opa/pr/justice-department-files-statement-interest-regarding-section-201-voting-rights-act
I think the economy would recover fairly quickly, if the plague were resolved. It wouldn't even have to be over, necessarily: it would still count as resolved if we had a consensus that we were going to just accept it the way we accept various other causes of death. For example, more than 32,000 people are killed and 2 million are injured each year from motor vehicle crashes in the US, and no one ever thought it was a reason not to have everyone commute by car. If we unanimously decided that a century worth of car-crash deaths (or whatever), whenever a plague comes along once a century or so, is an acceptable level of slaughter, and lifted all restrictions, I think the economy would pick up almost where it left off.
If we just let the plague run its course, the fraction of the population infected would be at least 1-1/r0, probably between 50 and 60%. Some percentage of infected people would die, maybe 2% of the infected people, or about 1% of the whole population, somewhere on the order of three million people.
@dan,
that certainly seems to be donald's preferred outcome.
Dan,
Is that an acceptable strategy and outcome, in your opinion?
Let's break your comment down, Dan.
For example, more than 32,000 people are killed and 2 million are injured each year from motor vehicle crashes in the US, and no one ever thought it was a reason not to have everyone commute by car.
Of course, not. But, we haven't yet found a way to prevent car crashes that cause death and injury. So, we just have to accept the outcomes of driving, careless or otherwise.
In the case of COVID-19, however, we do have a strategy that works to prevent death. And, it's not even rocket science. Unfortunately, countries like the US have not availed themselves of these life-saving heath strategies at a time when it would have been most effective and efficient at putting the country ahead of and in control of this novel coronavirus.
Hopefully, important lessons have been learned by the US government and its citizens so that when the next health crisis emerges the country will be well prepared to solve the problem without imperiling the economy.
[16]
dsws wrote:
I think the economy would recover fairly quickly, if the plague were resolved. It wouldn't even have to be over, necessarily: it would still count as resolved if we had a consensus that we were going to just accept it the way we accept various other causes of death. For example, more than 32,000 people are killed and 2 million are injured each year from motor vehicle crashes in the US, and no one ever thought it was a reason not to have everyone commute by car.
Comparing "acceptable" coronavirus deaths to "acceptable" auto accident fatalties doesn't work. People can voluntarily NOT drive a car, and if they do drive they have the right to drive defensively to minimize their chances of a mishap.
Coronavirus doesn't give one the right to opt out like that. You catch it involuntarily and even if it's mortality rate is only 1% that's a whole lot worse odds than driving (as one doesn't have a whole 1% chance of dying in an auto accident every time one gets in the car.
Dan,
If we unanimously decided that a century worth of car-crash deaths (or whatever), whenever a plague comes along once a century or so, is an acceptable level of slaughter, and lifted all restrictions, I think the economy would pick up almost where it left off.
First off, unanimously? That was just a little joke, right?
The funny thing about viruses that jump the species barrier to infect humans, if left to their own devices, is that they are quite capable of causing enough damage to health and health systems so as to render a workforce unable to engage to the point where the economy could pick up where it left off.
A re-working of comment [19] because, this is a very important discussion:
Let's break your comment down, Dan.
For example, more than 32,000 people are killed and 2 million are injured each year from motor vehicle crashes in the US, and no one ever thought it was a reason not to have everyone commute by car.
Of course, not. But, we haven't yet found a way to prevent car crashes that cause death and injury. So, we just have to accept the outcomes of driving, careless or otherwise.
In the case of COVID-19, however, we do have a strategy that works to prevent death. And, it's not even rocket science. Unfortunately, countries like the US have not availed themselves of these life-saving heath strategies at a time when it would have been most effective and efficient at putting the country ahead of and in control of this novel coronavirus.
Hopefully, important lessons have been learned by the US government and its citizens so that when the next health crisis emerges the country will be well prepared to solve the problem without imperiling the economy.
Back to the car analogy for a minute. I said in [22] that we haven't yet found a way to prevent car crashes. Of course, that is not accurate. There have been many pieces of legislation around the world to protect drivers from injury and death.
I guess my point in comparing that with the strategies to protect against COVID-19 really should have been to say that cars and COVID are the same in that way. In both cases, we try to do everything possible to prevent death.
So, why should we do nothing - or at lease, why shouldn't we do everything possible - to prevent death in a health emergency?
What was your point, Dan?
Dan,
If we just let the plague run its course, the fraction of the population infected would be at least 1-1/r0, probably between 50 and 60%. Some percentage of infected people would die, maybe 2% of the infected people, or about 1% of the whole population, somewhere on the order of three million people.
I'm not sure what point you're trying to make here. But, I think it provides a great opportunity for me to share what Dr. Ryan, executive director of the Health Emergencies Programme at WHO said yesterday at the regular WHO press briefing.
What follows is mostly a direct quote with some paraphrasing and taken from my own transcription of Dr. Ryan's remarks. And, since there has never been anything remotely resembling a word limit at this excellent blog, here goes …
Herd immunity is a term taken sometimes from veterinary epidemiology where people are concerned in animal husbandry with the overall health of the herd and an individual animal in that sense doesn't matter from the perspective of the brutal economics of that situation and those decisions.
But human populations are not herds and as such the concept of herd immunity is generally reserved for calculating how many people would need to be vaccinated in a population in order to generate that same effect.
So, we need to be really careful when we use terms in this way around natural infections in humans because it can lead to a very brutal arithmetic which does not put people and life and suffering at the center of that equation.
What also is concerning in this 'herd immunity' narrative, is that there was an assumption, as this disease spread around the world, that we are really just seeing the severe cases and the difficult cases and that sero-epidemiologic studies will show that most of the people in any given population have been infected and this will all be over and we can get back to normal business.
However, the preliminary results of sero-epi studies are showing just the opposite.
These studies are showing that the proportion of people with significant clinical illness is actually a much higher proportion of all those who have been infected because the number of people infected in the total population is probably much lower than we expected. (Studies as of today have shown up to only 14% or so of a general population have been infected, for example) Which means we have a very long way to go. It means, as the WHO DG, Dr. Tedros, has been saying for months, this is a serious disease, this is public enemy number one; we have been saying that over and over and over and over again.
And, we really do need now to step back and recalculate this as a mild illness and understand the serious nature of this outbreak. Let's not repeat these same mistakes - not taking this seriously, not putting in place the necessary measures. We have a second chance now, as a society in countries around the world, to put in place the necessary public health interventions; to put in place the necessary community support; to support our vulnerable populations be they in long term care facilities or in refugee camps. No one is safe unless everyone is safe.
When we look at the epidemics around the world we see that in some countries over half of the cases have occurred in LTC facilities or workers there. We need to look at these hot spots, at these really, really terrible situations in which we either haven't properly shielded people in those situations or protected them.
The idea that maybe countries that had lax measures or that haven't done anything will all of a sudden magically reach some herd immunity - and, so what if we lose a few old and vulnerable people along the way - is a really dangerous, dangerous calculation and I believe most member states are not willing to do that arithmetic.
Responsible member states will look at all their population; they value every member of their society and will try to do everything possible to protect health while at the same time, obviously, protecting society and economies and other things - we need to get our priorities right as we enter the next phase of this fight.
Here's a great piece by Bill Gates about a new first-of-its-kind at-home testing program that will help to better understand how the virus is operating in Seattle and how best to get back to work and school, and how this learning can translate across the world.
https://www.gatesnotes.com/Health/Seattle-Coronavirus-Assessment-Network?WT.mc_id=20200512100000_SCAN_BG-EM_&WT.tsrc=BGEM
In one form or another, I expect Gates to be a part of the Biden administration, assuming we will be so fortunate as to see Biden win the presidential election in convincing fashion.
No profanity, but lotsa insanity!
@liz,
i am wary of anything that comes from bill gates if it is even tangentially related to education. gates is one of the "edupreneurs" most closely linked to the attempted demolition of the nation's public school systems.
JL
I find that hard to believe, Joshua. But, he is "dead on balz accurate" when it comes to Pandemic I.
I will trust you on the public schools situation though. But I'd love to hear more from you about Gates' role …
As for Gates' recommendations on the response to Covid-19,
I'm most interested in his call for a national strategy for testing. Which is hard to believe is not already in place.
Whatever testing capacity the US has appears to be being squandered - or, at the very least, the people who should and need to be tested most (health workers, symptomatic people and people who have been in contact with positive cases) are not being prioritized by a national strategy for rational testing.
Is that an acceptable strategy and outcome, in your opinion?
No.
You have about as much ability to opt out of interaction that exposes you to risk of catching covid-19 as you do to opt out of living where there's housing and working where there are jobs. The difference is the illusion of control, not the reality.
I'm trying to understand what you are saying … is it that, even though we know how to mitigate viral transmission through a program of case identification, isolation, contact tracing and quarantine, we should make the massive investment that would make such a program a reality?
What was your point, Dan?
That the range of possible trajectories for the economy is very wide. We may have a Second Great Depression, that exceeds the first by as much as WWII exceeded "the war to end all ears". Or we may have an economic boomlet driven by pent-up demand, where immediate output almost replaces the economic activity being lost now, and the forced discovery that various work can be done from home provides some long-term economic benefit.
there should have been a 'not' in there but, whatever
Dan [34],
Oh, I see. You're talking about economic models.
Well, if you can't get this virus under control, then that is going to have a very negative impact on economic recovery.
And, we can be in control of this virus if we wish to be.
[32] was in response to the suggestion in [20], that the comparison is inapt because people can just opt out of commuting. Presumably the idea is to store yourself in a locker at work when it's not your shift.
Well, if you can't get this virus under control, then that is going to have a very negative impact on economic recovery.
Short answer: yes.
But I think it's more about whether we flail around with ambivalence and half-measures, or whether we settle on some response, any response, as long as it's coherent.
If we decide that we are willing to accept a much more thorough shut-down for three weeks, followed by a rigorous system of distancing, testing, and contact-tracing, we could go back to work at nearly full efficiency, and have our additional death toll (i.e. from people who catch it thereafter) be as low as the rest of the world. If we decide to accept a death toll of ten million, we could go back to work tomorrow. It would be criminally insane, but we could do it, and the economic damage would be very limited.
But if we keep on having an incoherent mish-mash of denial, misdirected effort, and too-little-too-late, we could have a death toll over a million and a Second Great Depression. If a stitch in time saves nine, then we're on track to need find out that nine stitches almost in time would have saved eighty-one.
I agree with all of that except that I don't think you can assume limited economic damage if you take the route of accepting 10 million dead or more.
The way I look at it, we can't talk about the health crisis and economic crisis as separate issues - they are one and the same.
I worry, and have stated my concern regarding this in the past, that Trump will/has interfered with the reports’ findings to make him look good.
I do not know if there is a way to double check the numbers in the Jobs Reports, unemployment numbers, etc, but Trump has shown a willingness to alter reports that do not paint him in a positive light (See William Barr’s Summation of the Mueller Report); and given the stakes behind his re-election campaign, we should be skeptical of any reports the federal government puts out between now and November 3. Trump must get re-elected to avoid going to jail... that has got to be in the back of his mind at all times.
And let’s look at what all Trump has done to aid in his re-election bid to date:
- Attempted to get Ukraine government to say it was investigating Joe Biden or risk losing military aid needed in its war with Russia. (Which led to Trump being impeached)
- Allowed the Federal Elections Commission to go for months without enough commissioners to have the quorum needed to pass any official findings. Finally, just before the election, a Trump supporter is getting pushed through the Senate to fill that roll.
- Once it became clear that many states are pushing for mail in ballots for November’s elections, Trump got rid of the old Post Master General and put in that role a Trump supporter that has no experience in running such an agency.
- Trump has forced the CDC to shelve the data they sent the White House on what is needed before we should re-open the country. Trump wants the CDC to put out more “suggestions” and less “requirements” for what must happen to reopen our country.
- Trump is trying to get states to not release or report numbers of COVID related dates. He has been questioning the official death totals the CDC has been reporting, saying he thinks that they are too high. Dr. Fauci today told the Senate that the official numbers are far lower than what the reality is! Lack of testing has made it impossible to get an accurate count.
There are many more, I am sure, but these are enough to recognize that we have to be on alert to the ways that Trump could mess with the upcoming election. He is a man without any conscious when it comes to harming others as long as he benefits.
Russ,
- Attempted to get Ukraine government to say it was investigating Joe Biden or risk losing military aid needed in its war with Russia. (Which led to Trump being impeached)
Do you think that it is somehow possible that similar attempts could be behind the Reade accusations (which I know are false!) or would that be too paranoid?
There are many more, I am sure, but these are enough to recognize that we have to be on alert to the ways that Trump could mess with the upcoming election. He is a man without any conscious when it comes to harming others as long as he benefits.
Indeed!
Did you take a look at that link I posted about the Justice Department and voting rights?
I don't think it's plausible that we would actually just accept slaughter such a scale. But if we did, the surviving 97% of us would still be going to work, going out to eat, going to the gym, and so on. Where does the economic impact come from?
Not if the virus isn't under control.
… and the slaughter continues to worsen.
… and the US becomes more and more isolated.
Yes, Elizabeth Miller I suspect Ms. Reade is a Repug hatchet job. And, no, I wouldn't put it past Trump to do whatever it takes to avoid a date with SDNY.
Wow, I sound stupid when I post from my phone instead of a computer with a real screen and a real keyboard. Autocorrect sees "the war to end all ", and it's absolutely sure that the next word that I really want is "ears".
Not if the virus isn't under control.
If you close your eyes and put the pedal to the metal, is your car under control? Sure, no sane person would drive that way, because you very quickly wind up dead if you do, and take a bunch of other people with you. But with the virus, 97% of us would survive. That's the premise: we control the virus, and set it for maximum casualties. It would mean we do go to the restaurant, the gym, the movie, the mosh pit, and so on. Some of us have decided to be the change they want to see, by going to rallies without masks or distancing, to demand exactly this course of action.
… and the US becomes more and more isolated.
Ok, tourism to the US from the sane world would completely stop. Likewise, no one would send their kids here to go to college. But trade would continue. A ship can take long enough that any cases would have been diagnosed before the cargo arrives.
Of course, I wasn't talking about tourism.
… or even trade.
… and, all of that assumes a Trump re-election. Hope I'm wrong, naturally.
That's the premise: we control the virus, and set it for maximum casualties.
But, Dan, is that an assumption (control of the virus) that you can realistically make - in the short term or even medium term, say through the end of this year?
New column up!
CW: Which is why he's pushing so hard to get businesses up and running right now, so that the Q3 numbers can show some improvement.
Trump certainly does seem to be betting it all on the 3rd quarter, doesn't he? CW, I would wager you did not fail to notice that all those hundreds of billions of dollars of CARES Act PPP "loans" include a number of requirements that must be satisfied if the borrower/employer desires to participate, including that the loan funds must be used to retain at least 90% of employees at full pay and benefits until September 30, 2020. So what do you want to bet that at the end of the 3rd quarter, a hefty chunk of airline/restaurant/hotel/etc. employees start getting laid off? Seems highly likely to me.