For Trump 2020, There’s More to the Story than Just the Stock Market

“But basing a campaign strategy on acceptable headline economic numbers while some parts of the nation are already in a recession is nothing short of tone deaf.”

The current economic struggles of America’s heartland, the states that made Donald Trump the 45th president, may imperil his re-election prospects this November. Whereas widespread concerns about the state of the whole economy this past summer cast a cloud over the president’s reelection prospects, headline economic numbers and sentiment have stabilized, and the public is increasingly bullish on Donald Trump’s odds of winning in November. Indeed, betting markets now give him a ~50% chance of occupying the White House for another four years. The system is undoubtedly thriving for urban-dwelling, service-sector employees with college degrees. As the “shareholder class,” their wages have risen, employment has increased, growth and measures like “earnings per share” have soared. For the rest of the country? Languishing from a drawn-out trade war with our largest economic partners, the manufacturing and agriculture sectors are nowhere near “great again.”  

Manufacturing employment stalled nationwide in 2019 as total employment rose by 1.8 million, and data shows that Wisconsin, Michigan, Indiana and Ohio may have ended 2019 with fewer manufacturing jobs than when the year began. (However, there has been considerable manufacturing job growth in certain Western state since President Trump’s election, most notably in Nevada, Wyoming, and South Dakota.) Even if data revisions show this is not the case, anemic employment growth in labor-intensive industries in Midwestern states is probably not what “Make America Great Again” meant to many.

It is not just about the individual farms or manufacturing businesses that are hurting—the knock-on effect in towns and surrounding communities is not negligible since every dollar spent is another person’s earnings.

The first economic releases of 2020 demonstrate further deterioration in manufacturing, wherein manufacturing employment actually fell by 12,000 jobs in December vs. + 145,000 net non-farm positions nationwide. Gauges such as the ISM index, which is a comprehensive survey monitoring factory/industrial activity in the U.S., shows the sector to still be in a contraction. 

On top of all this, farm bankruptcies have skyrocketed during President Trump’s tenure, and it is not a good look that the farm aid the Department of Agriculture promised to offset the trade war devastation primarily went to large, corporate farms, leaving the “little guy” that President Trump allegedly stands for out to dry. It is not just about the individual farms or manufacturing businesses that are hurting—the knock-on effect in towns and surrounding communities is not negligible since every dollar spent is another person’s earnings. Lower earnings translates to decreased spending at local businesses, as well as fewer dollars in tax receipts for local governments.   

Perhaps the president and his team saw these types of numbers, in addition to other flashing red alarms like falling trucker employment in the summer and decided that it was time to end the trade war and cut a deal with China. 

Even if tariffs are reduced (and China reverts to the same agricultural purchases before this conflict arose and medium-term uncertainty is lifted for firms), the U.S. is still undergoing a more secular economic transformation that is, sadly, leaving many behind. For example, more than 9,000 retail locations closed in the United States during 2019. Does America feel “great again” to people who have seen stores boarded up in their town, the sense of community and belonging these retail centers once offered now a thing of the past, and an increasingly isolated society where everyone stays inside, keeps to themselves, and receives all necessities at their doorstep? How about the thousands of people who lost their jobs as a result of this retail apocalypse and the families they support? 

Presidential candidates like Andrew Yang rightly talk about these ills, urging Americans to “think harder” about the structure of our market economy and whose interests it really serves. GDP and the stock market cannot be indicative of widespread prosperity if opioid overdoses, anxiety, and pessimism about the future are also at record highs.  

Maybe in November the American people will punish perceived corruption in the Biden family—or reject the democratic socialism of Senator Sanders of Senator Warren. Or, conceivably they may decide they’ve had it with the President’s antics and bluster. But basing a campaign strategy on acceptable headline economic numbers while some parts of the nation are already in a recession is nothing short of tone deaf. In 2016, President Trump effectively won by 107,000 votes, across Michigan, Pennsylvania, and Wisconsin. (Although it could also be argued that he missed winning Minnesota, Nevada, and New Hampshire by a combined 74,703 votes across these three states, a victory for President Trump in at least Minnesota and Nevada appears unlikely, even given the increased manufacturing job growth in Nevada as well as the Trump campaign’s belief that these states are in play.) As such, it is likely that President Trump cannot afford many defections from his 2016 constituencies in the Midwest. Thus, he should spend some time at the drawing board at the campaign headquarters in his eponymous tower mulling over certain economic realities as campaign season heats up.

Pieter Sittler works in financial services in New York and is a graduate of the University of California, Berkeley.