Trump Celebrates Booming Economy, But It May Fizzle in 2020

  • The economy posted strong holiday sales.
  • This joins the stock market and unemployment in signaling an economic boom.
  • But leading indicators aren’t nearly as positive.

For President Trump, you might think this would be a solemn holiday, given the recent impeachment. However, his approval rating has actually been on the rise recently, ticking up to as much as 44%, which marked his highest approval since early 2017. A good chunk of this is probably due to the bustling economy. We’ve witnessed a huge stock market rally and positive jobs data in recent weeks.

Trump took to Twitter Wednesday to remind voters of the economic surge with a tweet highlighting strong holiday shopping:

President Trump is celebrating strong retail sales this holiday season. | Source: Twitter

But will the stock market rally and other signs of economic strength be enough to secure Trump’s re-election bid in 2020?

Leading Indicators Offer Less Optimism

The economic numbers offer two different stories. One is favorable to President Trump. Trailing indicators such as retail sales, the stock market, and unemployment numbers are all booming.

But leading indicators have been declining recently. Things such as bond yields, durable goods orders, and manufacturing capacity utilization have pointed to a slowdown in economic momentum. Economic growth isn’t a switch that’s either on or off, but rather, it responds to feedback over a gradual period. Changes in Fed policy now, for example, may take as long as a year to translate into what’s happening for everyday Americans.

Meanwhile, lagging indicators such as the unemployment rate often don’t signal trouble until it’s too late. Look at the unemployment rate historically. It doesn’t generally move up much until a recession (shaded area) has already started:

The U.S. unemployment rate since 1948 | Source: St. Louis Federal Reserve

President Trump is correct that the unemployment rate is near its lowest levels since World War II. But…

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