President Trump’s campaign is seizing on record-breaking U.S. economic growth in the third quarter to make a last-ditch effort at convincing voters that he is the best candidate to handle the recovery from the coronavirus recession.
The economy had long been seen as Trump’s ticket to a second term, and polls show he retains generally favorable ratings on the issue. Yet this strength has been weakened by the coronavirus pandemic, and polls show Trump trailing Democratic presidential nominee Joe Biden nationally and in key swing states.
U.S. gross domestic product (GDP) increased at annualized rate of 33.1 percent, the Commerce Department reported Thursday, the fastest increase in modern history after a second-quarter collapse of even greater magnitude.
The president has sought to assure voters that he is best equipped to bring the U.S. economy back to its pre-pandemic strength. But while the new figures represent good news, economists warn that they do not reflect all of the deepening damage wrought by the pandemic.
To recover the total losses of the coronavirus recession, GDP would have needed to rise at a 45.7 percent annualized rate in the third quarter.
“Record gains are not enough to dig us out of the hole created by COVID,” wrote Diane Swonk, chief economist at Grant Thornton, in a Thursday analysis.
She and other economists have pressed for a new stimulus deal, but Congress and the administration remain at loggerheads on a new package.
“Without more stimulus, there will not be as much of a foundation to rebuild on, once the crisis passes,” Swonk said.
Trump repeatedly cited the 33.1 percent figure during a campaign rally in Tampa, Fla., on Thursday, as he promised future tax cuts and record job growth.
“Did you see the number today? 33.1 GDP. The biggest in the history of our country by almost triple,” Trump told the crowd.
But the president muddled his own message as he oscillated back and forth to other topics. At one point, Trump disclosed that Republicans had urged him to focus more on the economy and less on Hunter Biden, but he brushed aside those recommendations.
“I got a call from all the experts, right, guys that ran for president six, seven, eight times, never got past the first round, but they’re calling up, ‘sir, you shouldn’t be speaking about Hunter,’ ” Trump told the crowd. “They say, talk about your economic success. Talk about 33.1 percent, the greatest in history. Look, if I do, how many times can I say it?”
Before the pandemic hit, the U.S. enjoyed a 50-year low in unemployment at 3.5 percent, rising wages and low inflation. But Trump was forced to shift his rhetoric significantly when the U.S. economy lost more than 20 million jobs during April as businesses across the country were forced shut down to blunt the spread of the virus.
Trump has regularly touted the low unemployment rate before the pandemic and pledged to quickly return the economy to full strength. The U.S. has since recovered roughly 11 million of the jobs lost to the pandemic and unemployment has dropped to 7.9 percent from a peak of 14.7 percent in April.
Trump’s advisers have argued that a continuation of his tax policies and deregulation agenda will help.
“My judgment is, tax cuts and deregulation and energy independence have worked before the pandemic, they’re now really continuing to work as we reopen the economy,” White House economic adviser Larry Kudlow said on a call with reporters organized by the Trump campaign Thursday.
“I would not change courses midstream. I would stay with the policies that brought us here and are bringing us into a strong recovery which can last into 2021 and beyond,” Kudlow said.
Trump has regularly assailed and exaggerated Biden’s plans, arguing that a Biden administration would enact debilitating tax hikes and impose further “lock downs” meant to curb the spread of the virus that would hamper economic growth and result in a depression.
The former vice president has said he would raise taxes on those making more than $400,000 per year. Biden said in September that he would follow the advice of scientists if they advised him to implement a nationwide lockdown, but has since said he doesn’t believe such a step would be necessary.
Biden has consistently attacked Trump over his response to the coronavirus, which has been the dominant issue of the campaign. In a statement Thursday reacting to the GDP gains, Biden faulted Trump for failing to get a handle on the coronavirus in the first place, arguing that the vast shutdowns experienced in the spring were preventable. He also said that the recovery since has favored the wealthy.
“This report underscores three inescapable truths about Donald Trump’s economy: we are in a deep hole and President Trump’s failure to act has meant that Q3 growth wasn’t nearly enough to get us out of; the recovery is slowing if not stalling; and the recovery that is happening is helping those at the top, but leaving tens of millions of working families and small businesses behind,” Biden said.
Economists say Thursday’s growth numbers mask real economic problems. More than 22 million Americans are on some form of unemployment aid, and the growing third wave of COVID-19 could derail the economy and potentially halt its rebound.
“The strong GDP outturn gives a false impression of the economy’s true health,” wrote Gregory Daco and James Watson, economists at Oxford Economics, in a Thursday analysis. “Without further fiscal aid until 2021, a poorly managed health situation and election uncertainty could make for a long winter.”
Voters tend to give Trump high marks on his handling of the economy when compared with his handling of other issues, such as the coronavirus pandemic or race relations, and his numbers have been rather durable despite the recession.
A Suffolk University/USA Today poll released Thursday found that 48 percent of Americans approve of Trump’s handling of the economy, while 45 percent disapprove. Trump receives far lower marks on his handling of the pandemic, with 38 percent approving and 57 percent disapproving.
At the same time, some surveys suggest Biden has cut into Trump’s lead when it comes to voter preferences on who can better handle the economy amid the pandemic. A Morning Consult/Politico poll conducted earlier this month found that 46 percent of voters trust Biden more to handle the economic recovery following the pandemic, while 44 percent trust Trump more.
Republicans acknowledge that Trump’s message on the economy, while effective, may not ultimately make a difference for him on Election Day. Nearly 70 million Americans have already cast ballots in the election.
“He’s made the economy a central tenet of his campaign for re-election. But this is really a contest about his popularity,” said Dan Eberhart, a prominent GOP fundraiser. “There’s probably not enough time for the good economic news to be a game-changer, but it does validate President Trump’s economic policies.”
Chuck Coughlin, a longtime Republican strategist based in the battleground of Arizona, said Trump’s attitude toward the pandemic has lost him ground with persuadable voters in the state, even if his message on the economy has hit the right note.
“He is right about the economy and Arizona’s economy has performed better than most of the rest of the country, so he doesn’t have as big of a drag on him out here on that issue,” Coughlin said.
But Trump “seems to be thumbing his nose” at the pandemic, Coughlin said.