Any Economic Downturn Could Scramble Trump’s 2020 Strategy
The president projects optimism about the economy and his re-election chances, but his advisers are watching markets closely
WASHINGTON—President Trump has made the strong economy the central selling point of his presidency, and his advisers believe it is the key to winning a second term.
But this week’s damaging economic developments—resulting in fresh warnings of a possible impending recession—threaten to complicate that message 14 months before the election.
Mr. Trump and his advisers say publicly they aren’t worried. White House officials add that Mr. Trump—even as he continues to heap scorn on the Federal Reserve and its chairman, Jerome Powell—will keep touting the economy, as he did during a Thursday night rally in Manchester, N.H.
“The economy is phenomenal right now,” Mr. Trump said Thursday during an interview with a New Hampshire radio station. “With a normalized interest rate, we’re doing phenomenal. We had a couple of bad days. But we’re going to have some very good days.”
While he reacts to economic developments on Twitter, Mr. Trump has been privately assuring advisers that he isn’t bothered by recent drops in the stock market, according to two people who have spoken to him lately. And while more economists are predicting a recession in the next year, the threat isn’t considered a certainty.
The question for Trump’s campaign is whether he can continue to project such optimism through November 2020 in an uncertain environment.
“The president has spent his entire first term trumpeting the positive effects of the economy,” said Kevin Madden, a Republican strategist who previously worked on the presidential campaigns of Mitt Romney and George W. Bush. “So when we start to see indicators that maybe it’s beginning to soften, that has to be a core concern for them from a messaging standpoint, but also from the voter attitude standpoint.”
Adding to Mr. Trump’s challenge, Mr. Madden said, is that the president’s own policies are bolstering concerns about the state of the economy. “A great deal of the uncertainty and volatility is being driven by the White House’s trade policies,” he said.
Economic experts say that Mr. Trump’s trade war with China has alarmed Americans about the future of trade, and that the changing cost of doing business is causing trepidation about investment. Trade disruptions have also meant immediate trouble for export-dependent economies such as Germany.
The ebbs and flows of the economy are being watched closely by Mr. Trump’s political supporters. One official at the pro-Trump super-PAC America First equated the impact of a potential recession to other politically seismic events, such as a domestic terrorist attack or a declaration of war.
An economic downturn would provide substantial fodder for Democratic presidential candidates, who were already attacking Mr. Trump’s handling of the economy before this week’s warning signs.
“The country’s economic foundation is fragile,” presidential candidate and Massachusetts wrote in a blog post last month titled “The Coming Economic Crash—And How to Stop It.” “The Trump administration’s reckless behavior is increasing the odds of just such a shock.”
California Sen. Kamala Harris, in a five-day bus tour across Iowa, criticized Mr. Trump for “crowing” about a strong economy, while many Americans, she said, are struggling to pay rent and have to rely on payday lenders. “Today’s economy is not working for working people in America, and it needs to be addressed,” Ms. Harris said at a rally in West Des Moines on Saturday.
Trump campaign spokesman Tim Murtaugh said in the statement that Trump’s policies have “produced the best economy Americans have experienced in their lifetimes.”
Mr. Trump, who is spending the week vacationing at his New Jersey golf course, has sought to place the blame for any economic downturn on the Fed, spending much of Wednesday attacking the central bank and Mr. Powell, and saying that the trade tension with China is “not the problem.” White House officials said they expect Mr. Trump to continue publicly criticizing Mr. Powell.
Mr. Trump and his aides are also falling back on a familiar rejoinder: blaming the media. Mr. Trump, in a tweet Thursday, accused the media of “doing everything they can to crash the economy because they think that will be bad for me and my re-election.”
One White House official said it is too early to determine whether the economic news poses a serious risk to Mr. Trump’s re-election chances. White House and campaign aides acknowledged privately that a recession would threaten Mr. Trump’s re-election bid, which some advisers—and the president himself—believe will be a tough fight, even with a good economy.
“A full-blown recession would certainly cause the Trump re-election campaign to have to hit the reset button. A strong economy is at the center of President Trump’s argument for a second term,” said Dan Eberhart, a Republican donor and energy company executive. But he added, “The media follows the day-to-day changes in the market much closer than the voters do. This week’s data is a caution flag, but we’ve got plenty of laps left to go in this race.”
The White House has already taken steps to reassure political allies about the state of the economy. Its Office of Intergovernmental Affairs invited state and local officials to an off-the-record call next Tuesday with National Economic Council Director Larry Kudlow and other senior administration officials to discuss the economy. The emailed invitation included a screenshot of a tweet by Mr. Trump praising the U.S. economy as the “Biggest, Strongest and Most Powerful,” according to a copy viewed by the Journal.
An economic downturn could damage the one polling area where Mr. Trump has been on an upward trajectory in recent months. In a May Wall Street Journal/NBC News poll, 51% said they approved of Mr. Trump’s handling of the economy, up from 44% about two years earlier.
That same poll showed 51% of Americans disapproved of his overall job performance. A majority of Americans have said they disapproved of his job performance in 19 of the 20 polls taken since he took office.
Mr. Trump’s poor approval makes it difficult to persuade swing voters to re-elect him, a campaign adviser said. At a campaign rally in New Hampshire on Thursday, the president suggested that his re-election depends on votes from Americans who don’t like him.
“You have no choice,” Mr. Trump said, adding that replacing him would jeopardize economic gains from the past few years. “Whether you love me or hate me, you gotta vote for me.”
Mr. Trump’s advisers said they have no plans to change his economy-focused messaging. “Why would we stop touting the economy because of a recession warning?” asked one Trump campaign official, who wasn’t authorized to speak on the record. “The reality is that the bond market and stock market will do their thing, but the president’s policies are helping working Americans—wages are up, jobs are up, labor participation is up.”
Mr. Madden said that in 2012, positive economic developments made it challenging for the Romney campaign to criticize then-President Barack Obama ’s handling of the economy, as voters grew increasingly optimistic over the course of the year. Should Mr. Trump see the reverse next year, he said, “that’ll create problems.”