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How Coronavirus Could Tank the Economy — and Trump’s Odds of Reelection

Eric Levitz - March 2, 2020

Donald Trump’s greatest achievement as president is the same as his greatest achievement in pre-political life: restraining his destructive impulses just enough to avoid fully squandering the fortuitous economic circumstances he inherited.

Put more generously, Trump has sustained the Obama era’s favorable wage and job growth trajectories by supplying the economy with fiscal and monetary stimulus, and this has gone a long way toward compensating for the man’s many faults. But now, the real-estate heir’s (roughly) 73-year-long streak of good fortune may be finally running out.

Before a historically contagious coronavirus bubbled up in Wuhan, China, late last year, Trump’s reelection campaign had the wind at its back. Wall Street’s anxious chatter about inverted yield curves and impending recession had gone quiet. America’s unemployment rate was hovering near half-century lows, wages were rising, and consumer confidence reigned throughout the land. And when financial analysts gazed into their crystal balls (and/or Bloomberg terminals), they saw that 2020 would bring more of the same. With the U.S. and China’s phase-one trade deal finally inked, corporations spooked by trade war would finally breathe easy and invest copiously.

Two months and 3,000 coronavirus deaths later, Wall Street’s oracles are offering a very different prophecy. In its latest analysis, Goldman Sachs slashed its estimate for global growth by a full point, from 3 percent down to 2. For the United States, the new outlook would mean growth slowing to under one percent in the first quarter of 2020 — then to zero over the ensuing three months — before very gradually picking up in the latter half of the year.

The bank stresses that this forecast rests on arguably optimistic assumptions, writing that “while the U.S. economy avoids recession in our baseline forecast, the downside risks have clearly grown.”

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Meanwhile, the Trump administration has been doing itself no favors. Critics have accused the president of responding to the outbreak in a manner that prioritizes his own political interests above the public’s medical ones. But this is too generous. Our system of government yields many instances in which a president’s electoral incentives are misaligned with the public good. But a pandemic is not one of them. Trump’s handling of the crisis — repeatedly contradicting his own health officials in order to downplay the threat of an epidemic, tacitly encouraging the CDC to proceed from the rosiest plausible presumptions, and calling for a smaller emergency appropriation than even many congressional Republicans thought was warranted — has not served his own political best interest. By all appearance, his response has not been calibrated to maximize his odds of reelection in November, but rather, to improve the tenor of cable news coverage within the next 24 hours. Telling the public that your administration has contained a virus that it has not actually contained may put more green arrows on your TV screen’s streaming stock ticker for a few hours, but it will only undermine the public’s preparedness for an epidemic and thus increase the risk of an election-year recession — all while making your administration look retrospectively clueless or dishonest. In this instance, incompetence has not tempered Trump’s malevolence, but exacerbated it.

And for once, the well-born vulgarian’s good fortune may not immunize him from the worst symptoms of his own congenital ineptitude.