Trump’s silver lining — economic numbers could be surging by Election Day

There is one possible silver lining for President Trump in the dismal economic numbers that have followed the coronavirus lockdowns and jeopardized his reelection: There is nowhere to go but up.

At least that is the feeling among economists aligned with the Trump administration, who expect the easing of economic restrictions to unleash pent-up demand, as well as some experts who support presumptive Democratic nominee Joe Biden.

“I think the third quarter is going to be huge growth quarter, we agree with Congressional Budget Office, and the four the quarter, the whole second half, we’re going to see a tremendous rebound, going to spill over into 2021,” Larry Kudlow, director of the National Economic Council, told reporters outside the White House on Tuesday. He later added, “We got 50 states in different phases of reopening, and that’s a plus.”

Trump himself has repeatedly made the case that the third quarter, for which preliminary numbers will be known on Election Day, will mark a “transition” between the current economic doldrums and a period of renewed jobs and growth. “As I said, and I'll say it 100 times, we're going to have an incredible year next year, right at the beginning,” Trump told Ford workers in the key battleground state of Michigan. “Even our fourth quarter is going to be very good. There's a tremendous pent-up demand, and that includes for your cars.”

Gone is the low unemployment rate and respectable economic growth that was going to be the centerpiece of Trump’s case for a second term. In its place is 36 million jobless claims and counting with a contracting economy, as the coronavirus keeps consumers at home and government-mandated lockdowns designed to mitigate the outbreak force businesses to close. Even if reopening proceeds without a hitch, a full recovery by the time voters decide Trump’s electoral fate is highly unlikely. He is currently trailing Biden nationally and in most battleground states.

"Yes, unemployment will be something that moves back slower. I think it could be better than that. But you’re going to be starting at a number in the 20s and working your way down," White House economic adviser Kevin Hassett told State of the Union, conceding double-digit unemployment could still be with us as the election approaches. "So, of course, you could still not be back to full employment by September or October."

But even if the bottom-line numbers remain objectively bad, especially when compared to earlier in the Trump administration, the rebound from such an artificially low base could produce gaudy growth stats. That’s what top Obama administration economist Jason Furman has been warning Democrats since April, Politico reported Tuesday.

“You could easily have 1 to 2 million jobs created a month in those four reports before November,” Furman is quoted as saying. “And then toward the end of October, we will get GDP growth for the third quarter, at an annualized rate, and it could be double-digit positive economic growth. So these will be the best jobs and growth numbers ever.”

Furman should know. Unemployment was still relatively high when President Barack Obama was reelected, though the numbers were revised upward later that year because voters felt things were moving in the right direction after the low point of the Great Recession.

Asked on Tuesday about the recent stock market rally, Kudlow replied by pointing to Furman’s comments and other optimistic reporting on the economy. “They are reading this story on the front page of the Wall Street Journal, but there have been a number of these stories — I saw one in Politico where a good friend of mine from the other side agrees with us and the CBO — of a very strong third quarter and second half rebound,” he said.

Republican strategists believe it will be difficult for Democrats to pin the economy on Trump if they are trying to defend the lockdowns while the president pushes reopening. “Trump will need a forward-looking message,” said one GOP communications expert. “Keep America Great will not resonate.” Thus, the Trump campaign has pivoted back to “Make America Great Again.”

Not all economists agree the post-coronavirus recovery will be as sustained or robust. Any future outbreaks could lead to more lockdowns, and some businesses will prove harder to reopen than others — a “W-shaped” recovery rather than a “V-shaped” one, in the parlance of policy wonks.

Trump is not among the doubters. “You’re going to see it more and more,” he said of improving economic indicators at a White House event Tuesday. "We call it the ‘transition to greatness,’ and it really is.”