No question. President Donald Trump must be reelected in 2020.
Despite the hangover from one of the least successful and prepared presidents in history, President Trump has delivered to Americans exactly as promised.
And 3rd-quarter GDP growth was just revised up to 2.1% from 1.9%. Fed Chairman Jerome Powell proclaimed, “Conditions are generally good.”
And the “generally good conditions” are despite a nasty 40-day GM strike and Boeing’s 737 MAX airliner debacle.
It would be helpful if the sensitive Leading and Coincident indicators (see my chart below) still had the oomph of the early months of the long, long economic recovery, but given the length of the recovery, mismanaged Fed policy, and the headwinds noted earlier, no can do.
Remember, months of revision will follow. The cards we are initially dealt are never the ones played once revisions are complete.
No Recession Yet, Margin of Safety Slim
OK, no recession yet, but not much margin of safety either. I’ve been analyzing these things each month since early 1971. The best way to explain how I view the Leaders and Coincidents at year-end 2019 is, well, uncomfortable.
Two consecutive fully revised negative quarters for the Coincidents will signal official recession (once the NBER concurs). The same progression applies to the Leading Economic Indicators.
There has now been one pre-revision down quarter reported for the Leaders, but none yet for the Coincidents. The most recent monthly Coincidents report was a zero for the Coincidents. Although no big deal this early in the game, zero makes me uncomfortable matched with a negative quarter for the Leaders.
It will most probably be eight months before the Fed, NBER, or an honest media, could use the word recession.
Trump’s economic advisor Larry Kudlow is on top of all of this and can chart the correct course through the 2020 economic minefield. If I were in President Trump’s shoes, I would want Larry Kudlow plotting economic strategy for me. No one is better than Kudlow.