The logo for Goldman Sachs appears above a trading post on the floor of the New York Stock Exchange, Tuesday, Dec. 13, 2016. Banks are trading higher. Goldman Sachs rose $1.97 to $239.14. (AP Photo/Richard Drew)
Forget the tedious line-up of potential Democratic Party presidential candidates from Biden to Booker. None of this charisma-challenged lot pose much of a 2020 threat to Donald Trump by themselves, even after the losses of 2018.
The real danger to the president's reelection chances comes from the investment giant Goldman Sachs:
Goldman Sachs believes the U.S. economy will slow significantly in the second half of next year as the Federal Reserve continues to raise interest rates and the effects of the tax cut fade."Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019," wrote Jan Hatzius, chief economist for the investment bank, in a note to clients on Sunday. "We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration."
If this comes to pass, Donald Trump may have to kiss the Oval Office good-bye. Your Aunt Sally or Uncle Charlie might beat him.
"It's the economy, stupid" will be especially true in 2020 for a president who came to office in large measure because of his business expertise. He cut taxes and regulations -- and it paid off, as he would say, bigly. Unemployment numbers shrank to unprecedented lows for all segments of society. Businesses returned to American soil with manufacturing jobs, which were supposedly gone forever, coming back. Salaries even began to tick up. The stock market soared (not so much now).
Trump would do well to concentrate on preserving, if not increasing, this phenomenon, if he wishes to serve a second term. It will be more important, ultimately, than wall or no wall, or even Supreme Court appointments that will be contingent on available vacancies. (Ruth Bader Ginsburg could well will herself to be the first centenarian Supreme Court justice.)
Although Trump has an excellent financial team with the likes of Steve Mnuchin and Larry Kudlow, this won't be easy. The president, as many have written, doesn't always have close to the control of the economy some ascribe to him or he may wish to have. There's a whole world out there affecting it.
Nevertheless, Trump must focus on it. I'm one of those who agree he should have centered on it more during the last campaign. It might have impressed voters in Orange County, CA, and in Wisconsin, Michigan, and Pennsylvania, where his previous support dwindled.
The argument was that people were already bored with financial success. I tend to doubt that. What may have bored them is hearing about it in the same old way.
Whatever the case, powerful forces will be aligned against Trump on the economic front. Admit it or not, many of his political and media adversaries will be rooting for a recession, the more serious the better, even though the minorities they pretend to support will suffer most. These same forces are also actively contributing to the decline in ways covert and overt.
We could call this Cloward-Piven light, this time spear-headed by Ms. Ocasio-Cortez and Co., for whom the worse the economy does, the better. With any luck it will lead to socialism and the impoverishment of everyone. (Well, except for the leaders.)
This attitude may to some (unconscious?) extent also account for Goldman's bleak forecast, an ultimate version of cutting off your nose to spite your face by helping to create a self-fulfilling prophecy. Also, Goldman is globalist in opposition to Trump's nationalism, which, although quite mild, the bank probably sees as a threat. It will be remembered that Hillary was a frequent, extremely high-paid lecturer before the investment bank. (What she actually said to them was treated like a state secret.)
But what can Trump do? Much will be a sophisticated balancing act. The tariff situation with China needs to be finessed particularly carefully. Most would agree that China's behavior has been egregious and previous administrations virtually absent when it came to confronting it, yet still this must be handled with greatest skill. The Chinese play a long game incomprehensible to most Westerners.
Nevertheless, a decent trade agreement with China might force Goldman to revise its prediction quickly. More importantly, it might preserve and enhance the already booming economy to such an extent that Trump would walk effortlessly into a second term.
Roger L. Simon - co-founder and CEO Emeritus of PJ Media - is a novelist and an Academy Award-nominated screenwriter.
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