The news this morning that the unemployment has fallen below 4 percent for the first time since the year 2000—which was itself the first time the rate had gone that low since the 1960s—brings up an interesting twist as we consider what the midterm elections might hold in November. So the general proposition is that midterm elections always favor the “out” party because its members are more fired up than the president’s party, because it’s easy to focus on the president and blame him for the country’s ills, and because the political dynamic seems to be that the electorate doesn’t want one party too dominant.
Midterm elections were bad for Jimmy Carter’s Democrats in 1978; for Ronald Reagan’s Republicans in 1982 and 1986; for Bill Clinton’s Democrats in 1994; for George W. Bush’s Republicans in 2006; and for Barack Obama’s Democrats in 2010 and 2014. Given Donald Trump’s low approval ratings and the harbingers of Democratic enthusiasm in the special elections of 2017 and 2018, I’ve assumed the midterms will be very bad for the GOP.
The years when midterms did not hurt the White House’s party were peculiar ones. In 1990, George H.W. Bush scrambled political expectations and his party’s fortunes by making a budget deal that included the tax increase he promised two years earlier he would oppose. In 1998, the country voted in the wake of Lewinsky-gate. In 2002, voters were still shell-shocked by 9/11.
But it may be that Trump will have something going for him that was not true in any of the midterms (save 1986) that I mention here, and that is a roaring economy with rising wages. The first quarter GDP numbers didn’t roar, but purred—up 2.3 percent, as opposed to the previous quarter’s 2.9 percent. But second-quarter projections by leading institutions suggest a growth rate of 3.7 percent might be recorded at the end of June. The tight labor market indicated by the unemployment numbers, meanwhile, means that still-modest wage growth is almost certain to accelerate. Also notable, according to Bloomberg, is this: “Among the 130 companies in the S&P 500 that have reported results in this earnings season, capital spending increased by 39 percent, the fastest rate in seven years.”
Voters won’t respond to macroeconomic data. But if 2018’s midterm voters see their wages rise, enjoy the modest benefits of a tax cut, and feel like they can change jobs easily for the first time in more than a decade, they will probably be in a much better mood than previous midterm electorates were. This isn’t to say that they will suddenly love Republicans, assume the GOP is responsible for their bounty, and reward its representatives. But if they feel the country is heading in the right direction, that will obviously benefit the party in power.
I have no idea what effect good news in a midterm election year can and will have, and I’m not sure anyone else knows either. And I note that the Democratic pollster Stanley Greenberg, who is known for his cold-eyed honesty in reading the data he generates, is saying that Democratic momentum in the midterms is stalling out because his party is failing to make the case against the good news. “Voters, especially Democratic voters, are genuinely struggling in this economy. They remain in pain because rising costs outpace any pay increases,” Greenberg and two colleagues write.
Still, this is all very interesting.
