IT'S THE ECONOMY – AT 11:32 A.M. ET:  You may have noticed a number of economic stories that have come to the fore in the last week.  The reason is that the 2020 campaign has begun, and the economy will probably be the deciding issue.  If it remains strong, Trump could be re-elected, possibly by a substantial margin.

But if the economy goes south, Trump could be defeated by a new face, and could even face a primary challenge from one of the vast number of Republicans who intensely dislike him.

First the good news, from Townhall:   

A new poll from Gallup shows President Trump's approval rating on the economy just hit a new high.

According to the numbers, 53 percent of Americans give "positive remarks" on his economic policies. Gallup's bottom line: "Americans' relatively high approval ratings for Trump's handling of the economy reflect the public's overall positive sentiments on a number of economic indicators, including some readings that are as high as or higher than they have been in at least 18 years."

Meanwhile, it isn't just Gallup that shows an improvement for the President on this issue. CBS News also has a new report showing a whopping 74 percent of Americans rate the economy as good.

But the cloudy news, from CNBC:

Goldman Sachs believes the U.S. economy will slow significantly in the second half of next year as the Federal Reserve continues to raise interest rates and the effects of the tax cut fade.

"Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019," wrote Jan Hatzius, chief economist for the investment bank, in a note to clients on Sunday. "We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration."

The bank sees the economy expanding at 2.5 percent in the fourth quarter of this year, down from 3.5 percent last quarter. Real GDP growth will come in at 2.5 percent again in the first quarter of 2019, but then will slow to 2.2 percent, 1.8 percent and 1.6 percent in the next three quarters, respectively.
Goldman sees the Fed raising rates this December and then four more times in 2019. It will do so because inflation will reach 2.25 percent by the end of next year because of tariffs and increasing wages, the bank predicted, noting there was also a chance of an "inflation overshoot."

"With a large overshoot of its labor market target under way, the FOMC (Federal Open Market Committee) will likely be reluctant to stop until it is confident that the unemployment rate is no longer on a downward trajectory, a point we expect to reach only in early 2020," the note said.

COMMENT:  Of course, the president will have an argument ready if things slow down.  He'll claim, and possibly with some merit, that the slowdown started with the election of a Democratic House, as investors were frightened off by the prospect. 

That may work, or not.  But Trump's trump card is a strong economy.   His backup is the chaos in the Democratic Party. 

A year from now we'll be looking at actual candidates, and CNN will tell us that they will save America from TRUMP or BUSH or CHENEY or FOX NEWS.

November 20,  2018