Donald Trump’s administration is besieged by investigations, his executive orders are stymied by the courts, and his legislation is blocked up in Congress. But as the political news cycle oscillates between chaos and calamity, the financial news cycle is so relentlessly positive it makes this afflicted presidency seem downright charmed.
Just about anywhere you look, economic indicators are bright or brightening. The unemployment rate has been under 5 percent for all of 2017. Nominal GDP breached 4 percent annual growth for the first time in two years. Consumer confidence is near its highest level this century. The share of respondents who say jobs are “plentiful” or business conditions are “good” both reached their highest levels since 2001.
And while inequality has increased throughout the recovery, even that story has a new silver lining. According to Social Security data analyzed by the Economic Policy Institute, wages are now rising for the “bottom 90” and falling for the top percentile, as the labor market tightens and local minimum wages rise in a handful of places across the country. Rich folks, don’t fret: Social Security data does not account for capital gains, which make up a large share of affluent people’s income, and the stock market is, obviously, on a historic run—another factor that disproportionately benefits the richest.
Meanwhile, Donald Trump is the least popular president at this point in a first term in at least 50 years.
The juxtaposition of those two realities—rollicking economic figures vs. moribund approval ratings—is without modern precedent. It is certainly at odds with a great deal of academic literature on presidential popularity, the weight of which suggests that, when it comes to the main determinant of a president’s popularity, it’s the economy, stupid.
Data shows that, since the middle of the 20th century, income growth, GDP, and inflation have been dominant factors in explaining the favorability ratings of presidents. Several papers have found that presidential popularity spikes when the stock market roars, and falls during corrections. Researchers such as Alan Abramowitz at Emory University at Leo Kahane at Providence College have gained fame by predicting presidential elections by simply looking at economic conditions. This is hardly a matter of American exceptionalism: A study that looked at approval ratings in Brazil found that the state of the economy was one of the most important variables for explaining a president's popularity.
An analysis by Harry Enten at FiveThirtyEight dramatizes just how much Trump is underperforming his economy. Trump’s net economic approval rating (e.g., “how well do you think the president is handling the economy?”) is actually plus-two points. Compared with past presidents, that figure should predict a plus-12 net rating for his overall presidential approval, according to Enten’s calculations. But Trump’s actual approval rating is 30 points lower—at negative 18. That is, by far, the largest gap between projected and actual presidential approval since at least Jimmy Carter.
In short, it’s likely that Trump’s historically miserable approval is buffeted by some of the best economic conditions of this century. He’s not being dragged down by the anchor of poor macro conditions, like so many presidents before him. This economy is the floatation device. Trump himself is the anchor.
Why does this matter? Because the economy will, eventually, sink. As The Atlantic’s Annie Lowrey writes, no economy grows forever. A U.S. recession doesn’t seem imminent, but it is inevitable. And if it happens under Trump, the president may find that economic optimism was the keystone holding up his tottering administration.