The coronavirus lockdowns are starting to end across the country. Restaurants, bars, and offices are starting to reopen, and people are starting to go back to work.
Presumably some of the economic damage caused by President Trump's failure to contain the virus will begin to be undone. And because we are now at such a low point — more than 20 percent unemployment, GDP that has fallen off a cliff — the economic statistics for the third quarter of this year could conceivably show large figures in both growth and new jobs. Thus Democratic Party economist Jason Furman suggests Trump could have a strong political tailwind as election day approaches, and Democrats should be worried.
But there are reasons to be skeptical of this. Trump very well could win, but it will likely be in spite of a horrible economy, not because of it.
The background here is that roughly 40 million people have filed for unemployment, and about 30 million are collecting benefits under the expanded CARES Act unemployment insurance. The first quarter of 2020 saw the economy shrink at an estimated 4.8 percent annualized rate (which will likely be revised downward when further data comes in), and the second quarter will surely be much, much worse. But now that people are starting to go back about their normal activities, there may be some recovery. Since the economy is flat on its back, even a partial recovery will be recorded as a huge improvement from the terrible baseline.
Furman is likely drawing on the latest conventional wisdom in political science, which holds that voters are innumerate morons who have almost no idea what is happening to them. For instance, in the 2016 book Democracy for Realists, political scientists Christopher Achen and Larry Bartels present data that in the 1936 election, voters tended to reward Franklin Roosevelt myopically, voting for him in greater numbers if their state saw income gains in that year only — giving him little credit for growth in 1935 or 1934. Their case is overstated, but that hasn't stopped their general argument from being embraced by liberals like Matt Yglesias and Furman — if the growth numbers are good right before the election, then by this view voters will mechanically reward Trump even if it's a partial bounce-back from a collapse he caused himself through his own ineptitude.
There are several other problems with this argument in the current situation. First, the pandemic is not remotely contained. Though both new cases and deaths have fallen from the heights of April, daily new cases have averaged about 20,000 per day, daily deaths over 1,000, for the past two weeks. Some states, like Vermont, Hawaii, Montana, and Alaska, have nearly eradicated the disease. But in others, like Florida, North Carolina, Wisconsin, and Alabama, they are still increasing.
Insofar as easing lockdowns leads to people congregating in confined spaces and talking close to one another for a long time — like going out to dinner — all evidence suggests the pandemic will be fueled. That will surely be worsened by the developing ideology on the right that wearing a mask is for beta male liberals. It's quite surprising that so far New York City is the only place in the U.S. that has suffered a fully out-of-control outbreak, but neither is there any sign that rural or suburban states are immune. If warmer temperatures are slowing the outbreak as summer approaches, the reverse could be true when the election approaches during fall — possibly even causing a second major surge of infections.
In short, there is no reason to expect a full return to normal until a vaccine is developed and deployed. Trump has done almost nothing to contain the virus nationally, and he isn't going to start. There will be no return to full normal, and thus probably no serious economic recovery, so long as it is circulating in the wild, especially if the MAGA crowd is out there deliberately breaking quarantine to own the libs. Lockdowns may well end up being re-imposed if things get out of hand.
Secondly, even if the virus disappeared tomorrow the U.S. would very likely still be in serious economic trouble. As I have written before, America has been suffering from a shortfall of demand for the past 12 years, with the economy hovering barely above stall speed. It has now stalled completely, and while some people are getting money from super-unemployment and other rescue measures, millions of others have been financially ruined. The expanded unemployment benefits are set to expire in July, and Republicans have thus far sworn not to extend them.
Orthodox economics generally predicts rapid recoveries from recessions, but the snails-pace recovery after the 2008 crash shows this to be false. Lousy economic conditions can persist for a long time, and that is almost certainly the case today. It will take a great deal more stimulus on top of what has already passed to get to anywhere close to full employment and production — which is nowhere in sight.
Finally, there are reasons to doubt the political science dogma in this case. I had always assumed that the one thing that could seriously dent Trump's approval rating was a gigantic economic collapse, but so far at least, that hasn't proved to be true. His approval rating has fallen a couple points in the poll averages, but only to where it was in March. Head-to-head matchups against Joe Biden have not moved an inch in over a year. It seems attitudes about Trump are all but set in stone — and if he doesn't get blamed for the collapse, then it stands to reason that he wouldn't get much credit for any recovery.
Democrats should not sit back and take comfort in Biden's polling lead — an incumbent president can always win, and Trump appears to have an advantage in the Electoral College. But neither should they be panicking about Trump's economic data being too good as the election approaches. On the contrary, they should be worried about the American people suffering if super-unemployment is allowed to lapse. Democrats should use their control of the House to help people and take credit for doing so. In a word, govern.
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