The Economy Will Probably Be Pretty Good On Electi

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[October’s jobs data will be released just four days before Election Day.)

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The Economy Will Probably Be Pretty Good On Election Day

JUL 22, 2016 at 7:00 AM

By Ben Casselman
fivethirtyeight.com/features/the-econo...ction-day/

This week’s Republican convention will probably be remembered for Melania Trump’s plagiarism, Ted Cruz’s pointed non-endorsement of Donald Trump, and Trump’s own record-long acceptance speech. But the convention was also notable for another reason: the near-total lack of discussion of jobs and the economy.

Even Tuesday night (advertised theme: “Make America Work Again”) seemed to feature more discussion of Benghazi than unemployment. (Trump’s marathon speech did feature several sections on the economy, but focused more on crime and security.)

That silence stands in stark contrast to the primary campaign, which was often dominated by economic issues such as trade, immigration and the stagnation of middle-class incomes.

But maybe it shouldn’t come as a surprise that Republicans are looking to shift the campaign’s focus to other issues: It looks increasingly likely that when voters go to the polls in November, the economy will look relatively strong.

As recently as a month ago, that was far from clear.

The surprise “Brexit” decision sent financial markets into a tailspin. A weak jobs report sparked fears of a slowdown in hiring. Recession fears, which had died down since early this year, began to re-emerge. It was not hard to imagine Trump’s team excitedly pulling clips of all the times Clinton praised President Obama’s stewardship of the economy.

This week, though, it was probably Clinton who was applauding as Republican convention speakers repeatedly said she would represent a continuation of Obama’s presidency. The stock market has regained all its post-Brexit losses and is setting record highs. The job market rebounded strongly in June. Other economic measures, such as consumer spending, are strong.

In his acceptance speech Wednesday night, GOP vice presidential nominee Mike Pence called Clinton “the secretary of the status quo.”

Economically, at least, that might not be such a bad thing.

The election, of course, is still nearly four months away, and economists are notoriously bad at predicting slowdowns.

In fact, they aren’t even very good at assessing the current state of the economy; economists didn’t formally recognize the 2008-09 recession until it had been going on for nearly a year.

So it’s certainly possible that the economy will look very different in November than we expect today.

Possible, but not likely. The closer we get to the election, the less likely it is that the economy will take a sharp turn before voters cast their ballots — and, just as importantly, the less likely it is that any such turn will show up in the data in time to shift the narrative.

By this point in 2008, it was clear that the economy was in trouble, even if economists weren’t yet quite ready to call it a recession. Nearly two-thirds of economists surveyed by The Wall Street Journal in July 2008 expected a recession in the next year. This year, less than a quarter make the same prediction.

It’s helpful to think what a worst-case scenario might look like.

Suppose that last month’s uptick in the unemployment rate wasn’t the blip that most economists think but rather the start of a sustained increase in joblessness. That would make May’s 4.7 percent unemployment rate the trough — remember, a low number here is good — of the current recovery.

The fastest the unemployment rate has ever risen off a trough was in the late 1950s, when the unemployment rate rose 1.7 points over five months, the equivalent of jumping to 6.4 percent by October.1 (October’s jobs data will be released just four days before Election Day.)

That might well be enough to keep Clinton out of the White House.

But that kind of rapid increase is rare; even if the economy does take a turn for the worse, the unemployment rate will probably be under 6 percent on Election Day.

Of course, just because the country isn’t in or approaching a recession doesn’t mean voters are happy about the economy. Trump has successfully tapped into a deep well of economic anxiety among many (particularly white) Americans.

But it’s easy to overstate the level of economic pessimism. In a blog post late last month, former Federal Reserve Chairman Ben Bernanke noted that even as Americans remain dour about the general direction of the country, they have become more positive about their own financial situation.

Most Americans now say that they are better off than they were a year ago, and expect to be doing better still a year from now. No wonder the Republicans focused on Benghazi instead.

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