Republicans Worry Trump Can’t Exploit His Strength on Economy

(Bloomberg) -- Donald Trump can see one bright spot amid a sea of public opinion polls predicting he’ll lose to Joe Biden -- a majority of voters in the states he needs to win trust him to manage the economy.

But Republican strategists say they doubt Trump’s promise that the economy will quickly recover and that he can rebuild it to its former strength will win over voters more concerned for the first time with a public health crisis and while the economy is still hobbled by high unemployment and slow growth.

A New York Times-Siena College poll of six battleground states released Thursday showed that 55% of registered voters in key Electoral College states -- Michigan, Wisconsin, Pennsylvania, Florida, Arizona and North Carolina -- trust Trump on the economy, compared to 39% for Biden. But Biden had the overall support of most voters.

Trump had staked his re-election argument on the economy, when the nation was near full employment and stocks were soaring. The coronavirus devastated that argument as the economy ground into a recession and unemployment hit levels not seen since the 1930s. Trump began to argue that he built a successful economy once, and he would do it again if given a second term.

But four months before the election, voters are rendering judgment on issues they find more important than the economy, traditionally the No. 1 issue.

Trump is facing withering criticism over his handling of the pandemic, which has killed more than 122,000 Americans and is surging so sharply in some of those key states, including all-important Florida, that governors are re-closing or limiting business activity.

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Ed Rogers, a veteran Republican strategist and adviser in the Reagan and George H.W. Bush administrations, said the president was “cruising toward” re-election in January because he enjoyed peace and prosperity. The coronavirus robbed him of prosperity and the killing of George Floyd in Minneapolis police custody roiled domestic tensions.

“In January, Trump was taunting people, saying that you may not like me but you have no choice,” Rogers said. “By any measure, that said, this president has a lot of red lights flashing on the dashboard and is losing altitude and it’s not good. I’m a good Republican but I’m not optimistic. There’s no reason to be.”

Little Recovery Before Election

Trump touts the economy when there is good news, as he did in the Rose Garden after an unexpected slowdown in job losses earlier this month. He’s also cheered the economy at other White House events and on campaign stops.

“We’re going to go up, up, up,” Trump said at his first campaign rally since the virus outbreak began. “August, September, October and people are going to say, ‘Man, this guy’s doing a good job. He knows what he’s doing.’”

Experts say it’s unlikely the economy will comply in time.

“There’s going to be a lot of spinning of the numbers, but I think the overarching picture is going to be one of an economy that’s still struggling to regain its footing,” said Julia Coronado, president and founder of MacroPolicy Perspectives.

Gross domestic product is likely to fall at a 35% rate in the second quarter, then recover at a 20% rate in the third quarter, according to economists surveyed by Bloomberg News June 5 to June 10. Unemployment is likely to average 10.7% in the third quarter, edging down only to 9.5% in the fourth quarter, but that improvement won’t show before Election Day, according to the economists.

“He’ll have to run on employment. And the problem with running on employment is, the unemployment rate is still going to be relatively high,” said Stan Shipley, an economist at Evercore ISI. “It will still be in double digits until the end of this year. So it’s going to be tricky how he runs on it.”

Message Discipline

”The fact that they do give him credit on the economy and he’s still polling this bad is not a good sign,” said Brendan Buck, former top adviser to two Republican House speakers, Paul Ryan and John Boehner. “It doesn’t leave him a lot of places to go.”

Buck said Trump hasn’t shown the discipline to stay on a consistent message to voters. He noted that in 2018, Republicans urged Trump to focus on the strong economy but he hammered on immigration instead. Republicans lost 40 seats in Congress.

He sees the same pattern emerging as Trump ignores the pandemic and the recession in favor of tweets complaining about racial-justice activists tearing down statues and rallies in which he airs personal grievances.

“He’s never shown a lot of patience or put in the work to make the economic argument stick,” Buck said. “If you look at his Twitter account, it’s not about the economy, it’s about ‘law and order’ or ‘look at this video.’”

Federal Reserve officials are not expecting a quick recovery, and have projected unemployment won’t return to pre-virus levels over the next two and a half years. Some Fed officials, including St. Louis Fed President James Bullard, have warned that while growth may resume this year, a spate of business failures and lengthy period of unemployment could lead to a depression.

Biden Focuses on Health

Biden’s argument for election on the economy is a mirror image of Trump’s. He cites his work as vice president overseeing the government response to the downturn in 2008-2009. But mostly he’s focusing on the health crisis first, which his campaign believes will appeal to voters this summer and fall.

”To fix the economy, we have to get control over the virus. He’s like a child who can’t believe this has happened to him, all his whining and self-pity,” Biden said at an event Thursday where he met with voters who were struggling to pay health care bills during the recession.

Amy Koch, a Republican strategist in Minnesota, said that a recovering economy by November gives Trump a punchers chance at winning, but she expressed pessimism based on what’s she’s seeing with sparse crowds at businesses in Minnesota. Trump narrowly lost the state in 2016 and before the coroanavirus hit, his campaign eyed trying to flip it this year.

“It is the main thing that people vote on, so it can work in his favor in a good way and also if we see the fallout in the next few months, that’s going to be a problem. He knows that and that’s why you see him talking up the economy,” she said.

The president and his aides have said that the economy could have a “v-shaped” recovery. Trump suggested at a June 18 White House event about reopening the country that it could rebound more dramatically.

“We’re talking about a “V” shape. We’re almost like an “I” shape. “I” is straight up and down. But I talked about “V” shape, and a lot of people disagreed with me -- not everybody, but a lot of very smart Wall Streeters were disagreeing.”

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