Trump's re-election path gets trickier with US in recession

Covid-19, protests add to economic blues, but timing of recession news could help President

WASHINGTON • President Donald Trump faces a new obstacle to his case for re-election - the United States is now officially in recession.

The "recession" label, made official on Monday, cements the pain that many voters are already feeling from the economy - and will feed into their choice in November over who will be able to steer the economy back on track.

For Democrat Joe Biden, the proclamation from the National Bureau of Economic Research (NBER) is further evidence that the economy was on shaky ground even before the worst of Covid-19 hit.

Mr Trump, he said, has "squandered" the booming economy he inherited from Mr Barack Obama and himself, the previous president and vice-president respectively.

For Mr Trump, the recession declaration came on the first weekday after the May jobs report showed 2.5 million jobs were created and the unemployment rate fell when it was expected to jump.

On Friday, he touted the numbers as a sign of "the greatest comeback in American history".

For now, the recession comes as polls show the President's standing slipping across the board with the country reeling from the pandemic, its economic impact and protests over racial justice.

Mr Trump is hoping to regain his footing by relaunching his signature rallies in the coming weeks, where he will tout his economic record. And, while ignoring the recession announcement on his Twitter feed, he is maintaining his re-election argument that he built the strong economy once, and he can do it again.

"TRANSITION TO GREATNESS!" he tweeted on Tuesday, followed by, "THE REAWAKENING OF AMERICA!"

Mr Biden, for his part, argues that as vice-president in 2009, he and Mr Obama inherited the recession that began under Republican George W. Bush. He says he led the recovery efforts that sparked the economic expansion that ended in February and that he can do it again, this time as president.

A CNN poll released on Monday shows voters still give Mr Trump the edge over Mr Biden in managing the economy, 51 per cent to 46 per cent, even though Mr Biden is leading the race by 14 points.

The NBER, the official scorekeeper of when business cycles begin and end, said on Monday that the recovery that began under Mr Obama concluded its record 128-month run in February. But the bureau also suggested that it may not last, noting that the pandemic has "resulted in a downturn with different characteristics and dynamics than prior recessions".

But there can be no mistake it is a recession, the bureau said, given the "unprecedented magnitude" and "broad reach" of the job losses.

Mr Trump spent most of his presidency taking credit for the booming economy, and now Mr Biden is hanging the recession around his neck.

"The President isn't responsible for the virus," Mr Biden said in a statement. "But he is responsible for a completely bungled response that not only cost thousands of lives, but millions more jobs than should have been lost.

"That's on Donald Trump. It did not have to be this way," he said.

In fact, the timing of the announcement could actually help Mr Trump.

"Usually, the recession is over before they declare that it started," said Princeton University economist Alan Blinder, a former Federal Reserve vice-chairman. The more quickly the economy reaches the bottom, the more quickly it can begin to recover.

The economy could be in recovery now, he said, meaning that it would likely be official by Election Day. But that does not mean overall employment and economic output will be back to their pre-coronavirus levels.

"If you fall down 17 flights of stairs and climb back up three, you're in recovery," Mr Blinder said. "But you're still 14 flights down from where you started."

Job growth and household incomes have the most direct effect on presidential approval ratings - not whether economists say there is a recession. But recession dates are important to economic historians, who generally believe that Democratic presidents have been better for the economy than Republican ones.

Since Mr Harry Truman's election in 1948, Democratic presidents have spent an average of one quarter in recession for each term in office. Republicans have spent an average of 4.5 quarters in recession.

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A version of this article appeared in the print edition of The Straits Times on June 11, 2020, with the headline Trump's re-election path gets trickier with US in recession. Subscribe