President Trump has beaten his biggest political threat to date after being recently acquitted in the Senate’s impeachment trial. The latest Gallup Poll shows Trump reached a job approval rating of 49%, a record.
Presiding over an economy that continues to expand during an election year will likely get Trump re-elected, according to Brad Neuman, director of market strategy at Alger, an investment management company.
“We’ve looked into this and done quite a bit of research on it,” Neuman told Yahoo Finance’s “On the Move.” “If you look back at the past century and you look at all the incumbent races where there was an incumbent president seeking re-election, if there was a recession within the two years leading up to the election, that incumbent has not been re-elected and there’s been a new president.”
In recent history, Presidents Jimmy Carter and George H. W. Bush lost their reelection bids, while Ronald Reagan, Bill Clinton, and Barack Obama won. The most recent 2008 recession hit at the end of George W. Bush’s second term. “If there was no recession, then the incumbent actually won re-election. It has virtually a flawless track record back to 1932,” Neuman said.
The one thing that could disrupt this pattern: higher-than-average voter turnout by Democrats on Election Day.
Although Trump’s approval ratings are high (relative to where they’ve been), his numbers aren’t as high as past presidents’ ratings were – Ronald Regan reached 68% in 1986 and Bill Clinton was at 56% in 1996.
High voter turnout by Democrats could jeopardize Trump’s reelection chances. But Neuman said the deciding factor will be real per capita income. Looking at many elections over time, “generally, real per capita income – the higher that is, the more votes the incumbent gets, and the lower it is, the less votes the incumbent gets,” he said. (Alger said it looks at year-to-date data prior to elections, technically January through October, annualized.)
Real disposable income growth fell below 2% as Jimmy Carter and George H.W. Bush sought reelection, according to Alger research. “Normally when it’s growing a little less than 2%, it’s kind of the turning point, so more than 2% [would get the incumbent] re-elected. Less than 2%, the incumbents typically [don’t win],” Neuman said. “The data looks like the incumbent will be re-elected based on that measure.”
In the fourth quarter of 2019, “the year-over-year growth rate of real disposable per capita income growth was 2.1%, according to our data,” Alger said..
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