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Trump’s falling approval could lead to economic gimmicks

Rick Newman
Senior Columnist
President Trump arriving in Florida on April 18, the day special counsel Robert Mueller's report became public. (Photo by Joe Raedle/Getty Images)

President Trump’s approval rating seems to have taken a hit from special counsel Robert Mueller’s investigation.

In a Morning Consult/Politico poll conducted right after the release of the Mueller report, Trump’s approval rating fell 5 percentage points, to 39%, while his disapproval rating rose to 57%. The net approval of -18 is the lowest of Trump’s presidency. He hit -17 three times, most recently after the government shutdown that ended in January.

Trump’s approval could recover, if Democrats seem to overpoliticize the Mueller findings or there are other developments more favorable to Trump. But Trump’s penchant for compounding bad news with crude attacks on critics and overzealous policy thrusts suggests he could be just as unpopular a year from now, when the 2020 election is in full swing.

A president’s approval rating during a reelection campaign has a direct connection to the economy. It obviously reflects the condition of the economy, since voters reward or punish the president for changes in their own quality of life. But it can also lead a president to goose the economy if he feels his reelection odds require such a boost. That could be the position Trump finds himself in by the middle of 2020.

Research by Alan Abramowitz for the University of Virginia’s Center for Politics finds a meaningful correlation between GDP growth, a president’s net approval rating and the number of electoral votes he’s likely to win in a reelection race. Trump’s net approval has been in the range of -10 for most of his presidency, which suggests he would need at least 2% GDP growth by the middle of 2020 to win the required 270 electoral votes. It’s possible the economy will be growing at such a pace around then.

If Trump’s net approval widens to -20, which it is close to now, he’d need 3% GDP growth to hit 270 electoral votes, according to the Abramowitz model. And few economists think the economy will be that strong next year. The Federal Reserve expects GDP growth of 2.1% this year and 1.9% in 2020. Moody’s Analytics forecasts growth of 2.3% this year and just 1.6% next year.

Boosting growth ahead of election

Presidents can pull a few levers to try to boost growth in time for an election. Richard Nixon repeatedly pressured Fed Chairman Arthur Burns to cut interest rates in the early 1970s, to prime spending and growth during Nixon’s 1972 reelection bid. Nixon seems to have gotten his way, since the Fed did, in fact, cut rates on the timeline Nixon wanted. But economic historians think the Nixon Fed went too far, with needlessly low rates causing rampant inflation that plagued the economy for a decade.

Trump clearly wants the Fed to lower rates, a la Nixon. He has beseeched Fed chair Jerome Powell to do just that and tried to get dovish loyalists appointed to the Fed’s policymaking committee. Unlike Nixon, Trump hasn’t gotten the Fed to do his bidding, and the Senate has indicated it may not approve Trump puppets for key Fed posts. But Trump has another year or so to keep pressing for rate cuts in time to stimulate the economy by November 2020.

Trump could also keep a trade surprise in his back pocket and spring it in time to boost financial markets close to the 2020 election. Trump has imposed tariffs on a wide range of imports, sucking more than $50 billion out of the US economy and causing uncertainty that may limit investment and hiring. He could remove those tariffs at any time, creating a kind of relief rally in sectors most harmed by his protectionist trade policy. The timing would make most sense in the months leading up to the election.

Oil prices are another thing to watch. Trump’s new sanctions on Iran have pushed oil prices higher, with U.S. gasoline prices likely to settle above $3 per gallon this summer. A president running for reelection might want to brag about gas prices of $2.50 or lower. To push gas prices down, Trump could release oil from the U.S. strategic reserve a couple months before the election, which would push prices lower. He could also cut a deal with Saudi Arabia—whose brutal human-rights policies he has largely overlooked—to pump more oil.

As for additional tax cuts or anything requiring Congress to pass legislation, it seems out of the question. The House is obviously going to spend the next 18 months investigating dozens of leads Mueller dropped in their laps, and probably some he didn’t, with impeachment a possibility. It’s hard to imagine the Democrat-controlled House voting for anything that might help Trump look good. That leaves Trump on his own to boost the economy, or find some way to raise his standing among voters, so he doesn’t have to.