President Trump's Popularity Depends on the Economy - But it Probably Shouldn't

Tweet


As of November 13th, somewhere around 38% of American have a favorable opinion of Donald Trump, and around 56% have an unfavorable opinion of him. Right now, Trump is less popular than any past president at this point in their term. The possible exception is Gerald Ford, who had just pardoned Nixon. In fact, it's good to keep in mind that, on the day he resigned in disgrace, Nixon's approval rating was still 24%. Partisanship - as they say  - is a helluva drug.

But given that Trump's presidency has been a long sequence of scandals, FBI  investigations, offensive tweets, bone-headed gaffs, staff turnover, and legislative failures, we might still wonder why he's not even less popular. After all Trump has done (and failed to do!) how can 40% of Americans still approve of what he's doing?

Well, aside from partisanship, a big part of Trump's continued "popularity" is the fact that - as of early November, 2017 - the US economy is doing pretty well. Now, the economy may not feel all that great to all of us, but the US unemployment rate is only 4%, and the stock market is breaking records:

Tomorrow is anniv of POTUS’s election. Stocks are up 21% since, in one of the best “year-one” rallies ever:

(via @GoldmanSachs) @cnbc pic.twitter.com/bGo0wI10jy

— Carl Quintanilla (@carlquintanilla) November 7, 2017

So even though Trump has done a lot of dumb or evil things, many Americans who supported him are still willing to give him the benefit of the doubt as long as the economy keeps doing well.

In other words, if the economy were to take a sudden dive - and it very well might - we'd expect Trump to become even more unpopular than he is.

In US politics we have tended to support the current President when the economy is doing well, and attack him when the economy goes south. This is a really important thing to understand  But it's also important to understand that it's kind of dumb.

The President as "Economist in Chief"

During the campaign, presidential candidates always make promises about how they're going to make the economy grow, keep unemployment down, and boost productivity and innovation. And we tend to believe them. When the economy is doing well, we think that the President had something to do with it, and when the economy is doing badly we blame the President for screwing it up.¹

But in reality, the state of the economy at a given point in time depends very little what the current president is doing (or not doing).

There are a bunch of reasons for this.

1: The President is the Head of the FEDERAL Government, but Many of the Most Important Economic Policies are at the State or Local level

Lots of policy decisions that impact the economy are completely out of the federal government's hands.

• When you buy something at a store you usually have to pay sales tax - unless you live in Alaska, Delaware, Montana, New Hampshire, or Oregon - because sales tax is levied at the state level. 
• If you are having trouble finding affordable housing, then your local community's zoning laws  might be at fault. 
• If you find that you can't join a union, you might be living in a "right-to-work state" (like Alabama or Michigan) which outlaw most agreements between employees and labor unions. 
• If people are having trouble getting good jobs because of a lack of quality education then state and local funding of public schools may be partly to blame. 

All of these policy decisions - and many, many others -  are completely out of the President's control because they're not the responsibility of the Federal government.

2: US Economic Policy is Heavily Driven by Congress and the Federal Reserve - which the President Can't (Directly) Control.

Back in civics class we learned that Congress sends the President a bill, and he or she can either sign it into law or veto it. So even if the President wanted to pass some sweeping piece of legislation to fix the US economy, Congress might have different ideas. This happens all the time. President Obama was trying to pass an infrastructure bill for the last several years of his Presidency, but Congress was having none of it. But even Congress can't get it's act together, we still tend to blame the President.

Of course, the US Federal Reserve -the institution that basically decides how much money there should be floating around in the US economy - has a lot of power to influence the economy. The "Fed" can raise or lower interest rates, which can make it easier or harder for everyone from giant banks to average Americans to borrow money. Although the president appoints the chair of the Federal reserve board, there are checks and balances in place to ensure that the Fed can act independently of the White House. So even if the President wants the Fed to raise or lower interest rates, he or she has to just wait to see what the Fed does, like the rest of us.

The President can do a bunch of things that influence the economy, even without Congress. But he needs help to do anything really drastic. That's what the founders intended after all.

3: Even When Effective Economic Policies are Enacted, They Often Take Time to Work

Let's say that a future President somehow convinces Congress to write a bill overhauling the US education system, to try and train US students to better compete in the modern economy. Even if this program works exactly as intended, it won't actually produce any concrete results until years, maybe decades later, when students have graduated and entered the workforce.

Or let's say a President passes a tax credit to spur investment in small businesses. Even if this credit does what it's supposed to do, it won't produce any results until the entrepreneurs it inspires get their businesses up and running, and start turning a profit. That also might take years.

And let's say a President does something dumb, like eliminating the financial regulations which were put in place after the financial crisis. This move might well lead to another financial crisis, but it could take years before the financial industry shoots itself in the foot again and causes another crisis.

In general, even policies that have an enormous effect on the economy (for better or worse) may not actually produce those effects until the president who passed them is out of office.

A lot of the policies which are affecting the economy right now were enacted under Obama, Bush, Clinton, Reagan, or even FDR. That's especially true since Trump and the GOP have been so inept at actually passing legislation. But that's always going to be the case to a large extent.

The current health of the economy probably depends a lot more on what Presidents did a decade ago than what the current president is doing right now.

4: Some Things are Beyond Anyone's Control

Right now our current economic situation is influenced by, among other things, the fortuitous existence of vast quantities of oil shale in the Dakotas and the discovery of technology to extract it, the decisions of the Chinese Communist Party about whether to devalue their currency, hurricanes Harvey and Irma, Brexit, the civil war in Syria, the rise of social media, the internal squabbles of the Saudi royal family, and the choices of Canadian timber farmers, Russian oligarchs, Japanese CEOs, Mexican bond-holders, French investors, and European Union central bankers.  In today's interconnected world almost anything that goes on anywhere in the world -caused by humans or mother nature - could impact the health of the US economy, for better or for worse. As a country, we can influence some of these forces, but we can't control them all.

Sometimes when something goes wrong with the US economy, there's nothing any President could have done to avoid it.

But We STILL Think it's All the President's Fault

Right now, President Trump is probably getting a lot of credit for a healthy economy that he had almost nothing to do with. That probably doesn't seem fair. But if and when the US economy does go south (and there are some reasons for thinking it might...) President Trump is going to get blamed for it - even though that probably won't be his fault either. So, in the end, maybe it all balances out?

Notes

¹ There is so much political science research on the relationship between economic conditions and presidential approval that it's almost impossible to summarize, although the article and book listed in the references provide a decent starting point. And there is a lot of disagreements among political scientists about how exactly Americans' economic perceptions influence their perceptions of the President. How important is economics relative to partisanship, ideology, or candidate "likability" (this is obviously important in Trump's case)? Do we judge presidents on how well the economy is now, or how well we think it's going to do in the future? How do we distinguish between people's economic perceptions and the actual economic conditions? What role does the media play in all this? These are questions we're still trying to answer.

References

Dickerson, Bradley (2016) “Economic Perceptions, Presidential Approval, and Causality: The Moderating Role of the Economic Context.”  American Politics Research, 44(6), pp. 1037-2065

Erikson, R. S., Mackuen, M. B., & Stimson, J. A. (2002). The Macro Polity. New York, NY: Cambridge University Press.