Silver Lining in the GOP Gloom

The news seems unrelentingly bad for Republicans these days. President Trump’s former campaign chairman is indicted on money laundering, among other charges, while a Trump campaign foreign policy adviser pleads guilty to lying to the FBI about contacts with a Kremlin-connected Russian professor. Trump’s job-approval ratings are in the tank. Polls by NBC News/Wall Street Journal and Fox News both give him approval marks of 38 percent, with 49 percent strongly disapproving. Gallup’s three-night moving average through Sunday night put his approval at a record low of 33 percent, with 62 percent disapproving. The intensity of negative views in the NBC/WSJ and Fox News polls shows that Trump will be hard pressed to get into the public’s good graces.

Some of Republicans’ worst news comes from the Fox News poll, which shows Democrats holding a 15-point lead on the generic congressional ballot. If the election were held today, 50 percent said they would vote for the Democratic candidate for Congress in their district, to just 35 percent for the Republican candidate. The NBC/WSJ poll, which asked the question differently, found that 48 percent would prefer a Congress controlled by Democrats, with 41 percent preferring Republicans. The Fox News survey also showed that while the Democratic Party had an anemic positive rating of 51 percent favorable to 44 percent unfavorable, for the GOP it was downright awful, 40 percent favorable to 55 percent unfavorable.

But in the spirit of a Wall Street friend who likes to ask me, “Charlie, if you are wrong, why are you wrong?,” it seems only fair to look around and ask, “Are there any factors that are actually favorable to Republicans?” As this column frequently notes, current congressional district boundaries and natural population patterns help Republicans and could partially mitigate a highly unfavorable political environment for the GOP.

In the Senate, the map also helps Republicans, a consequence of Democrats having gained six seats in 2006 and two more in 2012. Now they pay a potential price, needing to defend 25 seats compared to just 10 for Republicans. Ten of those Democratic seats are in states that Trump carried last year, and five are in states he won by 19 points or more. Only one Republican seat is up in a state carried by Hillary Clinton.

Republicans can also take solace in knowing that the economy is doing well. Last week, the Commerce Department’s Bureau of Economic Analysis, in its “Advance Estimate” of real GDP growth, projected a 3 percent rise in the third quarter. In the second quarter, real GDP grew by 3.1 percent. The Federal Reserve Bank of New York staff’s most up-to-date “Nowcast” real-GDP model estimates that fourth-quarter growth will be 3.05 percent. And the stock market seems to be setting record highs almost every week.

By historic standards, these are not fabulous growth rates, but as my friend Sid Jones points out, the average annual GDP growth rate of this current, 99-month-long recovery/expansion is 2.17 percent.

Jones knows a thing or two about growth, having served as a senior economist in the Nixon, Ford, and Reagan administrations and finally as assistant Treasury secretary for economic affairs under George H.W. Bush. Pointing to the economic impact of hurricane recovery, Jones argues, “Growth above trend will continue in the fourth quarter, with added thrust from delayed economic activity and new stimulus from replacing damaged motor vehicles, houses, commercial buildings, and public infrastructure.”

Last week, the University of Michigan’s highly regarded Index of Consumer Sentiment for October came in at 100.7, noting that consumer confidence “slipped ever so slightly in late October, despite remaining at its highest monthly level since the start of 2004. This is only the second time the Sentiment Index has been above 100.0 since the end of the record 1990’s expansion, and its average during the first ten months of 2017 (96.7) has been the highest since 2000 (108.5).” The current favorable state of the economy is nothing that Republicans should feel complacent about, but in fairness to the GOP, it should be factored into our political equations. As Jones warns his clients, “Although this positive trend is now quite old, economic cycles do not die of old age. There are, as always, specific economic risks and uncertainties, but in general the global and domestic economies should report continued moderate gains over the next 15 months through 2018. It is the ominous global political, social, and security risks that continue to threaten this relatively sanguine ‘rosy scenario’ baseline outlook.”

Jones’s cautionary note about the economy is one that applies to the politics as well. The current political climate certainly looks ominous for Republicans, but some kind of “Black Swan” event or an international crisis could change the trajectory one way or the other.

This story was originally published on nationaljournal.com on October 31, 2017