Secretary of Commerce Wilbur Ross, appearing on CNBC about a month ago, said that since the election last year, the stock market added $4 trillion in wealth. He noted that the Dow Jones industrial average had gained 16%, the S&P 500 gained 13% and the Nasdaq composite gained 18%. And in the month since then, despite the Russian news, the markets have only gotten higher. At the end of last week, all three major indices on the New York Stock exchange closed in record territory.
Not so long ago, the stock markets’ wealth belonged to the rich. Today, however, 79% of wage-earners work for an employer offering a 401k retirement plan, and many keep an eye on it, especially those nearing retirement age.
Moreover, the unemployment rate in May was 4.3%, the lowest since Barack Obama took office in 2009 It ticked up to 4.4% in June, due mainly to more people entering the job market. Wage increases are lower than might be expected, a year-to-year increase of 2.5%. That is higher, but not much higher, than the 1.6% inflation rate for the past 12 months.
Traditionally, six months into a new administration, the parties squabble over who gets credit or blame for the economy. The Democrats, of course, credit the policies of President Obama for today’s prosperity, while Republicans, like Ross, attribute the gains to President Trump’s policies. Said Ross, “We’re lowering taxes, we’re cutting regulations… unleashing our energy resources and redoing our trade agreements.”
The longer the prosperity lasts, however, it will be hard for observers not to give the Trump Administration at least a modicum of credit for the “you never had it so good” economy. And if the good times roll through the 2018 election, it could give the GOP a strong talking point. The prosperity could lessen the enthusiasm for some normally anti-Trump conservatives to put high tax, big spending Democrats in charge of the nation’s economy, or even create a sub rosa comfort level for many Democratic voters that will keep them home on Election Day.
Bill Clinton understood the role of a sagging economy under President George H. W. Bush – “It’s the economy, stupid,” was the Democratic insiders’ slogan – and it led to Clinton’s victory.
It is possible that the four congressional special election victories that the GOP eked out in Georgia, Kansas, Montana and South Carolina were aided by enough Republicans voting to protect “the good times” with their votes. That’s not to say, however, that even a very good economy will help Republicans in 2018 or 2020.
Last week, in Oklahoma, as Red as a Red State gets, Democrats won two special state legislative elections in districts previously held by Republicans. A straw in the wind? Or an anomaly that means little when taken out of context?
Chad Alexander, an Oklahoma-based talk radio host and a former GOP state chairman, says that the low price of a oil – $45 a barrel – did not leave many Oklahomans feeling that prosperous. Nevertheless, the Sooner State’s unemployment rate has been holding steady at 4.3%, the same as the national average. More importantly, however, three very local issues – not enough revenue to fix the state budget, to finance teacher pay raises, and to reform the criminal justice system – hurt the GOP. Most of the Republican lawmakers ran on a platform of “We don’t have a revenue problem; we have a spending problem.” But most Oklahomans, says Alexander, don’t believe that.
Moreover, it had to help the Democrats that the resignations of two GOP lawmakers that created the special elections were cause by (a) a sexual harassment scandal, and (b) an arrest for involvement with an underage male prostitute. Family values, indeed.
It’s a cliché, but House Speaker Tip O’Neal (D-MA) summed it up best: “All politics is local.”
So Republicans should follow Wilbur Ross’s lead and brag about the economic gains under President Trump. But they will have to do more than that to win elections in either 2018 or 2020. Otherwise, the Democrats could resist their way to control of the House next year and the White House two years later. Stay tuned.