NDN Blog

New Polls Show Impeachment Moving Into Dangerous Territory For Trump

When Nancy Pelosi announced the beginning of an impeachment inquiry against President Trump on September 24th, all eyes turned towards the move’s impact on public opinion. While Trump has been the consistently least popular first-term President in the postwar era, Americans have in fact largely opposed impeachment proceedings, something which undoubtedly played a role in Democrats’ hesitation to fully embrace impeachment. However, over the past week, public opinion has dramatically changed, and it is now very likely that more Americans support both an impeachment inquiry and impeaching the President than oppose them.

First, support for starting an impeachment inquiry has significantly increased over the past week. Five polls – CNBC, CBS, Politico, The Hill, and Monmouth – asked this question both in August/early September and this past week. Averaging those five polls together, just 38.8% of Americans supported the inquiry in August/early September, compared to 50% who opposed it (net -11.2 percentage points). Over this past week, however, those same polls found that 47.6% of Americans supported the inquiry, compared to just 44% who opposed it (net +3.6pp). In a matter of days, support for the inquiry increased by a net 14.8pp, a very significant development given that new information involving the Ukraine scandal and others continues to surface daily.

Net Support For An Impeachment Inquiry

Second, and potentially more surprising, support for the outright impeachment of Trump has now risen to a plurality of Americans. Five polls – Quinnipiac, CNN, Ipsos, Civiqs, and Monmouth – have asked this question in August/early September and this past week (some of these polls specify impeachment and removal, while others just say impeachment). Averaging those five polls together, only 39% of Americans supported impeaching Trump in August/early September, compared to 52% who opposed it (net -13pp). Over this past week, however, support for impeachment surged to 46.4%, compared to 46.2% who opposed it, meaning that a slightly larger number of Americans want Trump impeached now versus those who do not.

Net Support For Impeachment

Finally, this rapid change in support for impeachment proceedings has been paralleled by a large drop in Trump’s approval rating over just the past week. On September 24th, the day that Pelosi launched the inquiry, Trump’s net approval stood at -9.8 according to FiveThirtyEight’s polling aggregate. In just seven days, it has fallen to -12.1. This decline of 2.3pp is especially notable because, over the 20 months from January 2018 to the present, the total range of Trump’s net approval has been just 7.8pp (from a low of -16.7 to a high of -8.9). As a result, this decline in just 7 days represents almost 1/3 of the entire movement in Trump’s approval over the past two years.

Overall, then, this first round of polling since the Ukraine scandal and the beginning of the impeachment inquiry represents very dangerous territory for the President. Larger numbers of Americans want him impeached than not, and this is before the House of Representatives conducts new impeachment hearings and likely even more leaks from the White House, two events that could increase support for impeachment even further.  

America’s Experiment With Protectionism Is Failing

Starting in March 2018, the United States has undertaken its largest experiment with protectionism since the end of the Second World War. The average tariff on all imported goods today sits at 6.1%, its highest level since 1947 and compared to just 1.5% in 2017. For decades, large segments of the political arena on both the left and right have argued that greater protectionism is necessary to protect American wages, jobs, and manufacturing. As a result, the effects of this experiment are critical not just to the Trump presidency, but to the ongoing bipartisan debate over free trade and tariffs. A year and a half into its implementation, however, the experiment appears to be failing. Jobs have not come back to the United States, domestic manufacturing has been weakened, the average household has lost over $1,000, and growth has slowed.

The Trade Deficit Has Continued To Rise, And Manufacturing Hasn’t Returned

The most important argument made by the President in defense of his protectionist strategy was that the tariffs would lead to a reduction in imports of manufactured goods and a closing of the trade deficit, thus spurring a revival of domestic manufacturing, jobs, and wages. Importantly, however, this import substitution has simply not happened. From January 2018 to July 2019, the US trade deficit has actually expanded by $2 billion/month (an increase of about 3.5%) in spite of the tariffs. While the trade deficit with China has fallen by $3 billion/month (a decline of 8.5%), those imports have simply been replaced by ones from other trading partners rather than by production in the US. The trade deficit has expanded by $6.6 billion with the EU (+49%), $3.5 billion with Mexico (+77%), $2 billion with Vietnam (+71%), and $0.7 billion with Japan (+13%), more than making up for the reduction with China.

As a result, there has been no re-shoring of manufacturing production that was previously “lost” to foreign imports, something that was critical to Trump’s argument that he would revive jobs and wages. It is important to note that this central argument is of course nonsense, because the trade deficit is a function of domestic national savings and investment, not trade policy, so a structural reduction in the trade deficit would also necessarily either increase the savings rate (thus reducing consumer spending) or reduce investment, both of which would harm jobs and wage growth. However, even if we take Trump’s argument at face value, it has not succeeded.

What has happened instead is that the tariffs have cut off US access to important export markets, increased the costs of inputs for businesses, and increased the prices faced by all American consumers. As a result, on every metric that Trump promised to improve – exports, manufacturing, economic growth, jobs, and incomes – his protectionist strategy has instead created a slowdown if not outright contraction.

Export Growth Has Collapsed

First, foreign retaliation to Trump’s trade wars has led to a closing off of key export markets for US firms and workers. As a result, export growth has slowed significantly since the trade war began, from an average of +9.1%/year in 2016 and 2017 to just +0.1%/year in the first half of 2019. In particular, farmer bankruptcies have hit a 6-year high as prices for soybeans and other products have collapsed in the face of weaker foreign demand.

Manufacturing Has Weakened

Second, US manufacturing – the industry that Trump based his campaign upon helping more than anything else – has seen an enormous slow-down since early 2018 as a result of weakened foreign demand for manufactured goods and higher input costs for factories. In August 2019, the manufacturing sector contracted for the first time in three years, and manufacturing job growth has ground to an almost complete halt this year – through the first eight months of the year job growth in manufacturing was just 5.5k/month compared to 15.8k/month in 2017.

Economic Growth Has Slowed

Third, overall economic growth has been severely impacted by the trade war. New research from the Federal Reserve estimates that the trade war will reduce US GDP growth by 0.8 percentage points in 2019 and more than 1.0pp in 2020, while Goldman Sachs projects the tariffs will reduce 2019 growth by 0.6pp. Furthermore, the IMF now projects that the trade war will reduce global growth by 0.8pp in 2020. Rather than increase growth to a sustainable 3%/year level as promised by the President, growth has instead rapidly decelerated since the tariffs were first implemented.

Job Growth Has Fallen

Fourth, job growth has weakened considerably as firms have fewer export opportunities and higher input costs and consumers are faced with lower disposable income. Moody’s Analytics estimates that the trade war with China has already destroyed 300,000 jobs, and projects that 450,000 jobs will be lost in total by the end of 2019 and 900,000 by the end of 2020 if the trade war continues. As can be seen below, both overall job growth and manufacturing job growth have declined significantly since March 2018.

Income Growth Has Reversed

And finally, real income growth has now begun to slow sharply after remaining relatively steady in 2017 and 2018 (although at lower levels than in 2015 and 2016). JP Morgan estimates that the average household will lose $1,000 by the end of 2019 as a result of the tariffs, while reduced hiring by firms has put pressure on nominal wage growth. As can be seen below, the slight increase in nominal earnings growth in 2018 has stopped and begun to roll-back in 2019 as the trade war has escalated, and nominal earnings growth is today slower than at the start of 2018.

Overall, then, what has the trade war gotten us? To be sure, Trump’s goals of reducing the trade deficit and thus bringing manufacturing production and jobs back to the US have not happened. Instead, this great experiment in protectionism has weakened essentially every economic metric that we measure. Over 300,000 workers have lost their jobs, middle class households are $1,000 poorer, and the country as a whole will have lost at least $100 billion in economic output by the end of the year. While much of the American political establishment is still enthralled with protectionism, the American people have largely come around to this reality. Poll after poll finds a wide majority of voters in favor of free trade and opposed to Trump’s tariffs – for example, a new Pew poll from July finds that Americans say free trade agreements are a good thing by 65% to 22%, with Democrats in particular in favor by a 73% to 15% margin. It is time now for Congress, and the 2020 Presidential candidates, to step up and end this disastrous experiment with protectionism.

New Data Highlights That Trump’s “Greatest Economy Ever” Wasn’t Actually So Great In 2018

This piece was originally published on Medium.

The performance of the economy in 2018 has been a critical benchmark for Trump’s repeated claims that he has brought the American economic engine to its highest levels in decades. Both of Trump’s signature policies on the economy, the tax cut and the protectionist trade policy, were implemented at the start of the year (the tax cut in January and the trade policy in March), so how the economy did in that period is crucial to the President’s economic legacy heading into the 2020 elections.

And at first, the data did appear to show the economy performing quite well in 2018. Unrevised data from the Census Bureau showed 3% GDP growth from Q4 2017 to Q4 2018, hitting the Administration’s target and quite a bit higher than the 2.5% growth from Q4 2016 to Q4 2017. Similarly, unrevised data from the Bureau of Labor Statistics showed a significant increase in employment, with monthly job growth averaging 223,000 per month in 2018 compared to 179,000 per month in 2017. And while the economy under Obama hit a 3%+ year-over-year growth rate in 4 different quarters and jobs growth in 2014–16 averaged 224,000 jobs, the numbers under Trump were still a real achievement. Finally, business investment (excluding energy) also seemed to pick up its rate of expansion, with annualized growth of 4.8% in 2017–19 compared to 4.5% in 2013–16. All in all, it had seemed like three major indicators of economic health had improved to some extent in 2018 under the Trump administration.

But then came the revisions. Over the past month, the Census Bureau and BLS have completed their annual revisions to the previous year’s data, and the result has been an across-the-board cut to the performance of the economy according to each of these metrics. First, the Census Bureau revised GDP growth in 2018 down significantly to 2.5%, meaning that not only did 2018 growth come in way below Trump’s 3% target but it also actually declined compared to 2017 (which was revised up slightly to 2.8%). Second, the BLS reported that actual job growth from March 2018 to March 2019 was a whopping 501,000 jobs weaker than previously reported. As a result, rather than creating an average of 223,000 per month in 2018, the economy actually saw job growth of just 185,000 per month, barely above the 2017 average of 179,000 per month. Finally, annualized business investment (excluding energy) in 2017–19 was revised down a very large 0.6 percentage points (from 4.8% to 4.2%), meaning that business investment was actually slower in 2017–19 than in 2013–16 when it averaged an annualized 4.6% (slightly revised up from 4.5%).

Taken together, this updated data paints a devastating picture of the failed promises of the Trump economy. The tax cut and protectionist trade policy, through reduced taxes on corporations and tariff-based incentives to produce in the US respectively, were supposed to create a surge in business investment which would then ignite both economic and jobs growth. Instead, there is little evidence that business investment outside of the energy sector picked up at all in 2018, and both economic growth and jobs growth either declined or remained constant from 2017 to 2018.

What has changed though? The escalating costs of these Trump policies. The CBO now estimates that the deficit will hit $960 billion in 2019, an astounding 64% increase over the $585 billion deficit in 2016 that Trump inherited. Furthermore, the CBO projects that the deficit will grow to an average of $1.2 trillion over the next decade.

As the 2020 election grows near, Trump has continuously touted the “greatest economy ever” as the result of his tax cut and trade policies. However, what we know now is that the trend of economic, jobs, and investment growth was really no stronger in 2018 than in 2017, before these policies were enacted. Instead, those very policies have created serious risks to future growth, including a rapidly slowing manufacturing sector, decelerating global growth, and an unprecedented fiscal deficit.

Trump's Trade War With China Has Failed Spectacularly, And It Now Might Bring Down The Global Economy

Over the past week, the reality of the trade war's failure to achieve any of its goals in reforming the Chinese economy has become clear to Trump. After meeting with their Chinese counterparts in Shanghai, Lighthizer and Mnuchin informed the President that China was unwilling to make any of the structural reforms that they sought on intellectual property, forced technology transfers, and state subsidies to exporters. Even worse, China had largely backtracked on their "promise" at the G20 to increase purchases of US agricultural exports that Trump had touted as a major victory. After 18 months of the trade war and the resulting decimation of US agriculture, sharply reduced American exports, and rapidly slowing manufacturing growth, what does Trump have to show for his efforts? Nothing at all. 

The question now is how does Trump respond to this failure, and will he be willing to take the American and global economies to the brink of recession in an attempt to keep one of his signature campaign promises. Last Thursday, Trump went against the advice of all of his economic advisers when he announced the imposition of new tariffs of 10% on $300 billion of Chinese exports, a move which has sent the S&P 500 down almost 5% over the past 5 days. He has also continued to threaten to raise these new tariffs from 10% to 25%, a move that Morgan Stanley forecasts would lead to a global recession within 9 months. And with China on Sunday moving to devalue their currency and end all purchases of US agricultural exports, it is very possible that Trump could retaliate in a way that leads to global economic chaos.

Weekly Notes On The Economy is a weekly column that NDN writes on the most recent economic news, policy, and data.

New Study Shows America Embracing Free Trade, Rejecting America First

We and others have been arguing that Trump’s "America First" policies have failed, from both a governing and political standpoint. A new study from Pew released today reinforces this view and shows another dramatic rejection of Trump’s fundamental argument about America and the world. When asked their view of trade, Americans overall said that free trade agreements between the US and other countries were a good thing for the US by a resounding 43 percentage points (65-22). This represents a dramatic shift from 2017, when Americans supported free trade agreements by just 2 points (45-43), and illustrates how the public as a whole has now rejected the protectionism of the Trump administration.

This repudiation of Trump's trade policies has occurred across party lines, with Republicans even supporting free trade by a 30 point margin today (59-29) after opposing it by 34 points (29-63) in 2017. Democrats in particular have become a fundamentally pro-trade party, saying that free trade agreements are good for the US by a 58 point margin (73-15), itself a significant increase from two years ago when Democrats were in favor of free trade by 30 points (59-29).

The failure of America First has also shown up in recent polling on immigration, as a rising number of Americans say that immigration and immigrants are good for the nation.  A recent example comes in this week’s Quinnipiac poll, which found that Americans think immigration has been good for the country by an astonishing 53 point margin (70-17).

You can find more from us challenging the President’s misguided trade policies in this series of essays; and more from us challenging the President’s immigration policies in this backgrounder

Friday's GDP Report Illuminates Trump's Broken Promises On The Economy

Last Friday's Q2 GDP report probably did more to expose the failures of Trump's economic agenda than any other piece of economic data in his Presidency. First, growth for the quarter came in at 2.1%, far below the White House's annual projections of 3%. To hit 3% for 2019, growth in the second half of this year will have to average around 3.4%, something extremely implausible given current estimates are at just 2%. Second, economic growth in 2018 was revised significantly downward, from 3% to 2.5%. As a result, the economy last year never came close to hitting Trump's promise of 3% growth, even with a $1.8 trillion tax cut for the rich. Finally, business investment came in negative for the second quarter, and was revised significantly lower for 2018, further dismantling Trump's promise that the tax cut would spur a surge in investment. Instead, the trend in business investment has actually fallen since the tax cut went into force in early 2018. 

What has been the long-term result, then, of Trump's economic agenda of tax cuts, tariffs, and deregulation that was promised to lead to 3% annual growth every year into 2028? Quite simply, nothing. Growth has averaged 2.1% over the past 3 quarters, and is projected by the Fed to be 2.1% for 2019 as a whole and 2% for 2020, a little bit slower than the 2.3% annual average during Obama's second term. The only difference is that Trump has ballooned the budget deficit, from $580 billion in 2016 to over $1 trillion projected for this year, to give handouts to the rich all the while trying to strip healthcare and food stamps from the poor. 

Weekly Notes On The Economy is a weekly column that NDN writes on the most recent economic news, policy, and data.

Simon In Richard Clarke's Future State Podcast On "The Future Of Hacking Democracy"

We’re very excited to share with you that Simon’s discussion with former National Security Council Special Advisor Richard Clarke, titled The Future of Hacking Democracy, is now available for your listening pleasure.  Drawing from his experience running a countering disinformation operation for the DCCC in the 2018 election cycle, Simon talks about what Russia did in 2016, new trends and threats we've seen in the past few years, and what steps we should be taking now to prevent foreign governments and domestic actors from manipulating our elections and discourse.  Big thanks to Richard for being a gracious host. You can listen to the discussion on “The Future State” podcast here (please select Episode 20). 

ASDC Resolution on Protecting our Elections from Foreign Manipulation

The following is the text of a Association of State Democratic Committees (ASDC) resolution that passed unanimously on June 15th in Santa Fe.  A PDF of the official resolution is below. 

Resolution on Protecting Our Elections from Foreign Manipulation

Whereas in 2016 the Russian government launched an extensive attack on America’s democracy and the Democratic Party and its leadership in particular;

Whereas the current Administration has not taken sufficient steps in these past 2 ½ years to protect our elections, our candidates, our political parties and our discourse; and

Whereas America’s intelligence services have warned that Russia and other nations are likely to attempt to manipulate our elections and discourse once again in this current election cycle; now, therefore, be it

Resolved, that the Association of State Democratic Committees (ASDC):

  1. Urges the Democratic National Committee (DNC) to establish a new party-wide framework which would discourage and prevent the use of the kind of illicit campaign tactics used by Russia against our party in 2016 in the 2020 elections; 
  2. Recommends this framework seek to discourage and prevent hacking and the use of hacked or stolen materials; discourage and prevent the use of disinformation tactics including, but not limited to, the use of fake social media accounts, fake websites, bots, trolls, troll farms, deep fakes and any use of falsified images, video or audio;
  3. Endorses efforts by Senator Ron Wyden and FEC Chairwomen Ellen Weintraub to protect our elections from cyber-attacks, including by allowing national party committees to use monies from the Party’s building funds to provide cybersecurity assistance to campaigns and state parties;
  4. Encourages a new party wide commitment regarding the reporting of illicit activity discovered from any source to the proper authorities, the social media platforms and the DNC; and to discourage the use of these tactics by supporters, allied groups and institutions and consultants.

Mover: Tina Podlodowski, Chair, Washington State Democratic Party

Seconder: Raymond Buckley, Chair, New Hampshire Democratic Party

Historically Low Poll Numbers, Slowing Economy Endangering Trump’s Re-Election

This piece was originally published on Medium.

A year and a half before the Presidential election, Trump’s electoral position looks precarious to say the least. According to FiveThirtyEight, Trump currently stands at a net approval rate of -11.6, and he hasn’t been better than -8 since March of 2017. Of the 12 Presidents in office since 1945, only 1 has had a negative net approval rate at this point in their first term — Jimmy Carter — and we know how that turned out. By contrast, Obama was at +1.5 in May of 2011, and he went on to win in 2012 by the still relatively modest margin of 3.9 percentage points.

Crucially, and even worse for Trump, this extremely poor level of approval has taken place while the economy has been strong. By the 1980 election in which Carter lost by 8.3 percentage points, the economy had entered a recession and unemployment was near 8%. By contrast, Trump inherited an economy with 4.8% unemployment and job creation of over 210k/month, and that strength has largely continued to this point. What this means for Trump, however, is that he is probably getting the largest boost from the economy to his approval rate that he will get — that is to say, he is at his high water mark in the polls right now. Furthermore, as the economy weakens, it is likely that voters who approved of him primarily because of the economy will grow more likely to oppose him. It could be devastating to his electoral chances in 2020, therefore, that the economy seems to have begun a sharp deceleration over the past several months (something that the conventional wisdom is only now beginning to acknowledge).

First, the economy in the first quarter of this year was never close to as strong as was commonly assumed. This misconception was based upon two very strong headline reports (3.1% GDP growth and 3.6% unemployment) whose underlying data was actually quite poor. The headline GDP number came in strong because two temporary, one-off factors (inventories and net exports) gave big boosts to the economy in Q1. However, these boosts will not happen again for the rest of the year, and the fact that they were large in Q1 will actually cause them to subtract from growth in Q2-Q4 (as businesses reduce their inventories after a big build-up for example). In fact, the core components of GDP — consumption and business investment — grew at their slowest rate since 2013, illustrating that the fundamentals of the economy were weak. Similarly, the unemployment rate fell to its lowest level in 60 years in April not because more people were employed, but because 490,000 people dropped out of the labor force. According to the household survey that is used to calculate the unemployment rate, 103,000 fewer people were employed in April than in March, and 300,000 fewer people were employed in April than in December 2018.

Second, the deceleration in the economy has become very clear with the release of new economic data for April and May. Three key reports that look at the fundamentals of the economy — retail sales, industrial production, and business investment — all came in very weak in April. Retail sales, a good proxy for consumer spending, fell for the 3rd time in the past 5 months while industrial production grew at its slowest rate since February 2017. Capital spending, a good measurement of the level of investment by businesses, declined to its lowest overall level since June 2018. And this data was all compiled before Trump increased tariffs on $200 billion of Chinese goods from 10% to 25%, and threatened tariffs of 5% on all Mexican imports. This rapid escalation of Trump’s trade wars with China and Mexico starting in mid-May has clearly affected the economy, and has turned already weak April numbers into extremely poor May ones. For May as a whole, services activity fell to its lowest level since early 2016 while manufacturing activity cratered to levels not seen since 2009. Furthermore, job growth fell significantly, expanding by only 75,000 jobs in May compared to the 2014–18 average of 215,000 jobs per month. Finally, consumer confidence took a sharply negative u-turn after the imposition of the tariffs in mid-May, which will likely weaken consumer spending in the weeks ahead.

Overall, then, the economy has clearly taken a dramatic turn for the worse over the past few months, something that is now starting to be reflected by the conventional wisdom in the markets and media. The Atlanta Fed and New York Fed now project Q2 GDP growth to be an average of only 1.2%, while Goldman SachsJP Morgan, and Morgan Stanley see an average of just 0.9% growth. Similarly, the Fed’s preferred metric for forecasting recessions — the yield curve — is now at its flattest point (meaning the highest probability of recession) since 2007. And the economy is likely to only get worse in the coming weeks. The most important risk factor for a further deceleration is Trump’s trade wars, and conflicts with China, Mexico, and Europe all look unlikely to abate anytime soon. With China, negotiations have come to a complete standstill and Chinese state media has become far more hostile to the US in recent weeks, meaning that the chance of a deal is extremely unlikely. Furthermore, as of this morning the White House has said that Trump still intends to impose the 5% tariffs on Mexican imports, and the complete lack of progress in trade talks with the EU means that the chance of a 25% tariff on auto imports from the bloc is increasingly likely. As these conflicts continue unabated, the risk of a full-blown recession only increases. Indeed, Morgan Stanley’s economists last week forecast a global recession if Trump escalates his trade wars any further.

What does this mean for Trump and his chances of re-election in 2020? Very simply, it could mean that the President suffers a major defeat in 2020, if not an early primary challenge late this year. According to Ipsos polling from mid-May, Trump has a positive approval rate on just 2 out of 14 policy areas — his handling of the US economy (+5) and employment and jobs (+12). His average approval on the other 12 areas is -13, including -12 on healthcare, -12 on trade, -13 on taxation, and -11 on foreign policy. If the economy falters and his approval on those metrics falls in line with his broader popularity, the GOP could face a landslide defeat next year. As it is right now, Trump is the most unpopular first-term President in the postwar period, but depending upon his actions towards China, Mexico, and Europe over the next few months, things for him could get a whole lot worse.

Trump Is Leading The Economy Into A Substantial Slowdown

Over the past week, new economic data has painted a picture of a rapidly decelerating US economy. In April, industrial production grew at its slowest rate since February 2017, retail sales declined for the 3rd time in the past 5 months, and capital spending fell by 0.9% to its lowest overall level since June 2018. And this data was compiled before Trump increased tariffs on $200 billion of Chinese goods from 10% to 25%. Since then, the numbers have gotten even worse. In May, US manufacturing production fell to its lowest level in 9 years while overall business activity fell to its lowest level in 3 years. Meanwhile, growth projections for Q2 GDP have fallen rapidly, with the Atlanta Fed, the New York Fed, JP Morgan, and Morgan Stanley all seeing growth under 1.5% this quarter. Indeed, the Fed's preferred metric for forecasting recessions - the yield curve - is now at its flattest point (meaning the highest probability of recession) since 2009. Trump's trade war, and recent significant increase in tariffs, has played a large role in this slowdown. Export markets have dried up for American farmers and manufacturers, investment has declined as firms face significant uncertainty, and higher costs for consumers and producers alike have caused output to slow. You can find more of NDN's analysis on why the economy is currently worse than conventionally believed here. As well, you can read our work detailing the failures of the President's tax cut here and his trade policy here

Weekly Notes On The Economy is a weekly column that NDN writes on the most recent economic news, policy, and data.

Syndicate content