If it’s indeed “the economy stupid,” its hard for me to see anything that derails his reelection, and that likely convincingly (especially if the nominee is Elizabeth Warren or Bernie Sanders). The yawning drama of the impeachment may have something to say about it of course. But I doubt it. The predetermined impeachment is simply too predictable–when the dust clears we’ll know that Mr. Trump–shock–wanted to use his position to embarrass a political opponent, and we’ll know that Democrats were out to get him from before day one even if he were Mother Theresa. Oh I forgot, we already know this.

So what happened that puts Mr. Trump on the glide slope to re-election? Most recently is the signing of the Phase One of the trade deal with China. Phase one does nothing about the one real issue Mr. Trump is right to push on China for, its theft of US intellectual property. Nor does it do anything about Beijing’s treatment of US firms and the conditions they have to meet to get into China’s markets. Further, its doubtful that any benefit we actually get out of this will make up for the permanently lower global and US GDP that we lost due to the trade war, but this likely takes more incendiary trade actions off the table prior to the election. This removal of the trade uncertainty is all goodness for the economy between now and election day. Sometimes the cessation of beating your head against the wall can count as a victory.

Next up, the Senate passed the revised NAFTA. This revision and its support to special interest big labor politics is a step backward, but once again, its providing a more certain framework going forward and will likely harm Mexico more than it hurts the US. My suspicion is the cost predation we are inflicting on the Mexicans for auto production will simply lead to more production in other parts of the world rather than a return to the US. Which paradoxically may once again give more incentives for Mexicans to illegally immigrate to the US. But….this overall only harms us a bit, and the more certain framework going forward will be a big boost.

Then there is the monetary stimulus. The Fed is buying bonds at $60B per month and there is no scheduled end in sight. Markets are loving it, and the possibility of rate hikes and the end of this monetary ease (which is also more than matched by the other CBs, e.g., Bank of Japan and the European Central Bank) prior to the election seems to me to be near zero.

The Trump Administration is targeting the huge regulatory morass of the National Environmental Protection Act. Every large infrastructure project has to go through often years of regulatory review, and Mr. Trump wants to skinny that timeline down. When you think of the great construction activities we’ve done in the past (e.g., Golden Gate Bridge*, Hoover Dam, Empire State building), which were completed in months and low numbers of years when now the studies go into the decades, obviously there is room for improvement. Predictably, this is reported as gutting environmental protections, and there is likely a compromise somewhere in between for the man that likes to deal, but its clear that Mr. Trump’s deregulatory agenda is not done, and that will encourage business activity.

But most importantly, job and income gains continue to be robust, benefitting poor and minorities the most they’ve seen in years. The WSJ editorial board noted this well on 10 January (gated):

The Federal Reserve’s interventions inflated asset values, which helped the affluent but did little for low- and middle-income Americans who don’t own stocks. Enter Donald Trump, whose deregulation and tax reform unleashed a surge of business investment (before his tariff spree) and hiring, which has drawn workers off the sidelines and raised wages.

The comparative data are striking, and mostly ignored by the press. During the first 11 quarters of the Trump Presidency, wages for the bottom 10% of earners over age 25 rose an average 5.9% annually compared to 2.4% during Barack Obama’s second term, according to the latest demographic data from the Bureau of Labor Statistics. Wages for the middle two quartiles increased 3.2% compared to 2.2% and 2.7% between 2012 and 2016. Wage gains for the top 10% have held steady at about 3%.

Less educated workers have also seen the strongest gains. Wages have risen at a 6.1% annual clip for workers over 25 without a high school degree and 3.9% for those with some college—both about three times faster than during the second Obama term. Wage gains have also accelerated though to a lesser degree—to 3.2% from 2.2%—for college grads.

Aside from the bizarre political theater that both parties seem determined to give us, the economy is doing pretty well, and likely to continue through the election in November.** Bernie’s call for a revolution in this kind of environment are likely to fall on deaf ears of too many voters that are satisfied with their personal circumstances, even when they may lament the national circumstances. For Never Trumpers, you’ll need to wait for more years to see your deliverance.***

* Completed in just over 4 years, which was ahead of schedule and under budget. Think we could do this today?

** The bill for the bloated government spending is still the ticking time bomb of our national debt, but low interest rates mean we won’t deal with it until later– mañana. That doesn’t mean we’ll deal with it tomorrow–mañana means not today.

*** Yes I know, “he who lives by the crystal ball eats lot of broken glass.” But like any good economist, I can extrapolate a trend line!