Three days hence those Americans not too lazy, or not seriously unhappy with the choice before them, will join the 37 million who have already voted. Hillary Clinton is hoping they will have taken on board Friday’s jobs report. The economy added 161,000 jobs in October, and the reports for the past two months were revised upward by 44,000. The unemployment rate fell from 5 percent to 4.9 percent, the lowest in about 40 years. The rate including discouraged workers fell to 9.5 percent, the lowest level since April 2005. Average hourly earnings were up 2.8 percent, the largest increase since 2009.
In a normal year, such late-breaking data would have little effect. But this is no normal year. The polls show Secretary Clinton ahead in enough key states to be the person who chooses the new drapes for the White House (or re-installs the ones she chose 24 years ago if they have been archived in anticipation of her return). But there may well be a hidden army of geographically well-placed Trump supporters unwilling to reveal their preference to pollsters, just as there were Brexiteers who held their peace when confronted by pollsters. If so, Donald Trump will be deciding just how much gilt to deploy to get the White House up to his standard.
It won’t take many poll-shy Trumpeteers to create a surprise: George W. Bush won Florida’s rich harvest of electoral votes in 2000, and the presidency, with a margin of only 537 votes out of almost six million cast in the Sunshine state. So the jobs report need matter only to a few of the 10 percent of voters who claim to be undecided in order to have an effect on the election, an effect favorable to Hillary Clinton.
We already know which candidate the business community is rooting for: Clinton. Share prices have declined steadily as The Donald’s prospects improved after the FBI decided to revive its investigation of Clinton’s carelessness with national security by using a private e-mail server. The reason: Investors and businessmen abhor uncertainty, and Trump is the very embodiment of uncertainty. He marches toward the presidency to the beat of some internal drummer that only he can hear. Some hedge funds are guessing that a Trump election will knock 5 percent off share prices.
Clinton on the other hand is more or less predictable, and certainty appeals to investors, even those who might be hurt by Clinton, a born-again “progressive” in thrall to her left wing. Yes, she will raise taxes on the rich, but they don’t really care since the increases she has in mind will not significantly deplete their petty cash drawers. Yes, she wants to increase regulation of her friends on Wall Street, but the low level of their concern is demonstrated by their continued willingness to pour millions into her campaign coffers. Yes, she wants to continue relying on the same- old-same-old policies, but the jobs report suggests those policies are working. Besides, better the Hillary you know than The Donald you don’t.
Certain facts will face whichever candidate wins. One is the prospect of contentious litigation. The fraud suit over Trump University goes to trial on November 28 before a judge Trump claims is prejudiced because of his Hispanic origins: the Supreme Court has ruled that a sitting president is not exempt from such civil (non-criminal) claims. Clinton will be bedeviled by multiple congressional committees investigating her use of a private server, and for granting foreigners access to her State Department in return for contributions to the Clinton Foundation—pay-to-play in the political vernacular. Talk of possible impeachment is now the stuff of Washington dinner parties, as is the possibility that Obama will use his remaining time in office to grant her a pardon to pre-empt such congressional action.
On the economic front, there is little doubt that by the time our 45th president is sworn in on January 20 the Federal Reserve Board’s monetary policy gurus will have raised interest rates, and announced its intention to continue a slow but steady move upward from zero. That might crimp the economy and even, in the view of more than a few economists, bring an end to the slow recovery from the financial crisis. Either because the recovery is long-in-tooth, or more likely because the interest rate increases or some other policy change—perhaps to protectionism—kill it. Fed economist Glenn Rudebusch says, “Like Peter Pan, recoveries appear to never grow old.” The don’t die of old age; they end when murdered by policy makers.
In addition, the new president will find several problems crying for his or her attention.
-health care costs are out of control;
-productivity stubbornly refuses to rise, so that more jobs are not expanding the size of the economic pie;
-the national debt will have passed the $20 trillion mark and will be rising to a level that economists believe might cause all sorts of economic mayhem;
-the infrastructure is in need of investment, which both candidates are promising to make on a massive scale, and our military of rebuilding, the rising debt notwithstanding.
In my view, the new White House resident will have one important advantage: an economy that with proper political nurturing can produce reasonably strong growth. Consumer spending is growing at a healthy clip, and is likely to continue doing so. The household debt service ratio, the portion of incomes households need to pay interest on their debt, is near its lowest level in the 36 years since data have been reported, freeing cash for other uses. Young buyers have returned to the housing market from their rental apartments and their parents’ basement couches. Auto sales have cooled a bit, but remain robust, although partly in response to discounting. Expenditures on research and development are rising, which might result in an end to the decline in new start-up ventures. Congress seems ready to loosen the national purse strings in response to urgings by former fans of austerity, including the International Monetary Funds and most G-20 members, Germany excepted. Score one for Harvard’s Larry Summers, preacher of neo-Keynesianism.
Perhaps most important, Paul Ryan, the speaker of the house, is a reasonable, policy-oriented Republican available to Mrs. Clinton as a negotiating partner if her hard-left supporters will allow it, and Ryan’s hard-right colleagues give him negotiating room. Unfortunately, the 2018 and 2020 election campaigns are already under way, and political posturing might trump reasoned negotiation.
