Approval Ratings Not Enough

For Trump, the economy may be even more important than for his predecessors. His low-40s approval rating is already perilous for an incumbent, and the economy is the main factor keeping him afloat. He scores poorly on most other policy issues and on questions of leadership and character.

“If the economy is what’s holding him at a 43% approval rating, what happens if there is a recession or a stock market retrench going into 2020 or in 2020? If that were to occur, at that point what’s holding him up?” said Joe Trippi, a Democratic strategist and presidential campaign veteran. “There is a danger that the one thing that’s holding him up starts to dissipate. And then he’s in deep trouble.”

In February 1991, Bush’s approval rating in the Gallup poll reached an astounding 89% after the Gulf War. By June 1992, as unemployment was peaking, his approval rating plunged to 38%. Shortly before Election Day, in mid-October 1992, it was 34%. Then he was swept out of power by Democrat Bill Clinton.

Signs Point to Slow-Down

The yield on the 10-year Treasury note fell below the 2-year note on Wednesday after the gap gradually shrank over the past two years. An inversion — in which short-term interest rates are higher than long-term rates — is a sign that economic growth is expected to slow.

Before the markets closed, Trump tried to deflect any blame for the economic news by turning it on the Federal Reserve’s interest-rate increases, venting about the “CRAZY INVERTED YIELD CURVE!” in a tweet Wednesday, blaming it on the central bank’s interest rate increases.

A Federal Reserve Bank of New York index based on the yield curve shows the probability of an American recession over the next 12 months is close to its highest level since the financial crisis more than a decade ago.

Still, economists caution that the warning signs don’t mean that a crash is about to hit.

“There’s not a ton of flashing warning signals from a pure economic sense that would suggest a recession is imminent, yet we have all of these other signals — some coming from the markets obviously — that suggest that caution is certainly warranted right now,” said Sam Bullard, senior economist at Wells Fargo & Co.