The Memo: Economic disaster poses danger for Trump

The economic suffering caused by the coronavirus crisis is becoming starker by the day, posing a huge political danger to President Trump and raising the stakes for his push to reopen the economy.

Trump looks like he could roll the dice by pushing to open up the economy by Easter. Doing so would be in contravention of the advice of most public health experts.

But the president seems desperate to fight for a second term with at least some evidence that the worst has passed and the economy is recovering.

“Every day we stay out, it gets harder to bring it back very quickly,” he said at a White House briefing on Thursday. 

On Thursday morning, fresh data showed new unemployment claims had rocketed to 3.2 million during the previous week. That figure was more than four times bigger than the previous all-time high, which was recorded in 1982. 

Just prior to the crisis hitting, new claims had been filed at around the rate of 200,000 per week.

Almost all economists agree that the United States will soon be officially in a recession, with gross domestic product expected to fall precipitously at least through the second quarter.

But the president opened his briefing on Thursday by insisting that things were “going to be better than ever” once the crisis passes. On previous occasions, he has promised that the economy will come “roaring back.”

On Thursday, he also said that people “don’t want to be sitting around” and held out the possibility of opening the nation up bit by bit.

“We may take sections of our country that aren’t so seriously affected,” he said. “We’ve got to start the process pretty soon.”

But there is simply no way that the United States economy can bounce back quickly from such a seismic shock, according to most economists.

“It’s a mess,” said Mark Zandi, the chief economist of Moody’s Analytics. “At the moment, it feels like we are in a bit of a free-fall. We are headed to at least high single-digit unemployment, maybe double-digits unemployment.”

Zandi asserted that there would “not be a v-shaped recovery; maybe a Nike swoosh-shaped recovery.”

Whether that is fast enough for Trump’s reelection hopes is another question. 

A president who had previously bragged about the stock market’s gains during his tenure has seen those gains largely wiped out — though some losses have been pared by a three-day upward bounce this week.

On Wednesday, Trump claimed that the media were hoping that the COVID-19 crisis would have a profound and negative effect because they wanted to see him beaten in November.

“The media would like to see me do poorly in the election,” he said.

Behind the scenes, even some Trump allies are worried about his push to reopen the economy as early as mid-April, fearing that a resurgence of the virus would be catastrophic, both in terms of public health and politically in terms of Trump’s reelection hopes.

But others defend his basic impulses on the issue.

Sam Nunberg, who worked for Trump’s 2016 campaign, said that it was unfair to portray the situation as a simple one in which the president was on one side and all experts on the other.

Nunberg argued that “expert opinion” did not begin and end with public health professionals such as Dr. Anthony Fauci, the key scientist who has been openly skeptical of Trump at times.

“He has other expert opinion he needs to listen to — on the economy, on defense, in agriculture, in labor,” Nunberg said.

Trump aides and allies sought to play down the significance of the new unemployment figures on Thursday.

Controversially, Treasury Secretary Steven Mnuchin told CNBC that the job numbers “right now are not relevant.”

White House trade adviser Peter Navarro said that the new claims were “totally expected.” Senior counselor Kellyanne Conway told reporters at the White House that the jobless claims were “sad but not shocking.”

But if Team Trump has clear incentives to play down the impact of the crisis, outside experts tell a different story.

“This is not just a recession. It’s different even from the Depression,” said Julian Zelizer, a professor of history and public affairs at Princeton University. 

“It’s a total shutdown. People are scared not just about how long this lasts but what happens. Are they actually going to lose all their money?”

Professor Allan Lichtman of American University, one of the few prominent forecasters to predict Trump’s 2016 election win, asserted that no party has held on to the White House “in the midst of a recession, even extremely mild and fading recessions like in 1960 and in 1992.”

Still, neither Zelizer nor Lichtman were willing to count Trump out. Zelizer noted the tendency of voters to move in volatile ways “when people are really scared not just for their health but for their economic well-being.”

Lichtman noted that one of the most distinctive characteristics of Trump’s presidency has been the apparently unshakable loyalty of his base.

So far, Trump’s approval ratings during the crisis have ticked up. His net job approval in the RealClearPolitics average of polls as of Thursday evening — negative 2.5 points — was his best ever, except for a vanishingly brief honeymoon period in the first weeks of his presidency.

Zandi, the economist, acknowledged that there were some silver economic linings to the present moment, because the current crisis was clearly the result of a freak occurrence, rather than springing from fundamental flaws in the financial system, as was the case in the crash of 2008.

Still, he noted that Trump will have to grapple with a grim picture if he is to win a second term.

“Unemployment on Election Day is going to be high single digits.  If he’s lucky, it will be 5 or 6 percent,” Zandi predicted. 

“People’s savings are depleted, their net worth is lower, there will be business failures. You would think that would be a problem for the president.”

The Memo is a reported column by Niall Stanage, primarily focused on Donald Trump’s presidency.