Howes on the economy, stupid | Michigan Radio
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Howes on the economy, stupid

Oct 20, 2018

Judging by conventional wisdom and all-knowing polls, President Donald Trump and his Republicans face a historic wipeout in the coming mid-term elections.

Credit Daniel Howes / Detroit News

But if you accept the Clintonian notion that “it’s the economy, stupid” such thinking may be just a bit too conventional.

Trump’s economic czar, the former CNBC personality Larry Kudlow, breezed into town this week for a stop at the Detroit Economic Club. He was surprisingly armed with statistics making the case that America is undergoing the biggest growth boom since Ronald Reagan occupied the Oval.

Legions of Trump haters might not want to hear it, but ol’ Larry may have a point or several, actually.

Unemployment is plumbing historic lows for most demographic groups – including those generally aligned with Democrats. For the first time in a decade, the World Economic Forum named the United States the world’s most competitive economy. Consumer and small-business confidence are strong.

There’s more. Kudlow said the economy boasts seven million more job openings than the number of people unemployed. Income after taxes and inflation is up three percent. And Federal Reserve banks in St. Louis and Atlanta predict third-quarter growth will top four percent, double what the critics predicted.

Kudlow says, quote, “ordinary folks are making money. For the first time in 20 years, the whole range of the workforce is prospering. It’s not just the top – it’s everybody.”

The calculation here is clear: an administration whose deal-maker-in-chief reduces almost every policy decision to a financial transaction is betting that fatter wallets will trump politics in the mid-terms. That a buoyant economy generating jobs is more important than the Russia investigation or Saudi Arabia’s complicity in the death of a Washington Post columnist or the Supreme Court battle over Justice Kavanaugh.

Kudlow’s message: The good times are just getting started.

What this means for the hometown auto industry is less clear. Interest rates are rising. Consumer demand for cars, trucks and SUVs is softening. And Trump tariffs real and threatened are causing some auto execs to whisper that dreaded word “downturn.”

Kudlow’s not buying it. Because the data doesn’t support it. Because the autos are still making decent money. And because conceding the point would contradict the message he’s delivering to the industrial heartland on behalf of the Trump White House.

What he calls “the American growth story” will “go on two, three or four years,” he says a conclusion not universally shared by prognosticators predicting slower times by 2020 just in time for the presidential campaign.

And in this town, the trade tension sparked by Trump’s tariff wars isn’t helpful, either. General Motors’ No. 1 market is China. It’s No. 2 for Ford Motor.

The president’s hard-line tactics and their reliance on steel, aluminum and threatened auto tariffs are eating into the automakers’ bottom lines. Ford’s CEO says they’ve already cost the Blue Oval one billion in profits.

Will that influence voters around here? Team Trump is betting no … with a little help from the economy, stupid.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.