Trump was planning to build his re-election campaign on the economic upturn during his administration. But with the damage done by the coronavirus lockdown, Trump's greatest strength has become his biggest weakness.
Historically, presidents tend to lose when they're in the midst of a recession. Between the collapsing GDP, the record rise in unemployment, and consumer spending at an all time low, Trump's chancest are looking more and more bleak.
Oxford Economics, a leader in global forecasting and quantitative analysis, has predicted a "historic defeat" in the national election.
"It would take nothing short of an economic miracle for pocketbooks to favor Trump," Oxford Economics wrote in the report, adding that the economy will be a "nearly insurmountable obstacle for Trump come November."
The model has correctly predicted the popular vote in every election since 1948 other than 1968 and 1976, disregarding the fact that two candidates (George W. Bush in 2000 and Donald Trump) lost the popular vote but won the presidency in that span.
Prior to the pandemic, the Oxford Economics model predicted Trump would win the popular vote by 55%. With the measurable effects of the economic down turn taken into account, the model predicts Trump winning 35% of the popular vote. This will be the lowest performance by an incumbent in history.
The Oxford Economics also conducted a state-by-state study, factoring in local economic issues, and predicted that battleground states like Iowa, Wisconsin, Michigan, Pennsylvania, Ohio, Missouri and North Carolina are likely to switch to Democrat. "We would expect these states to experience significant economic contractions and traumatic job losses that would likely swing pocketbook vote," the report said.
Still, many people remember 2016's dismal predictions of Trump's chances. "Traditional models work in normal times. But we're not in normal times right now," said Greg Valliere, chief US policy strategist at AGF Investments. There are still six months to the election, and Trump's strategy is likely to place blame for the downturn on China and Biden. "No one can go negative like Donald Trump," Valliere said.
There's also questions of the further damage done by the coronavirus. If another outbreak occurs, critics will say that Trump opened the country too early. But there is a lot of pressure to put the country back to work.
From CNN Business
The election uncertainty could pose a risk to the stock market, which has spiked since late March on hopes of a V-shaped economic recovery and in response to massive stimulus from the federal government.
Wall Street doesn't want to see the pro-business elements of the Trump agenda disappear. Although investors don't love Trump's trade wars, his corporate tax cuts boosted S&P 500 earnings and set off a bonanza of share buybacks. Trump's regulatory rollbacks and spending hikes have also helped lift stocks.
Despite the pandemic, the S&P 500 is still standing nearly 40% above where it was prior to Trump's election.
If Biden wins the White House -- and the Senate flips to Democrats -- investors will be worry about tax hikes on companies and the rich, new restrictions on oil and gas production and increased financial regulation.
"In almost every area where Trump has undone former President Obama's legacy," analysts at Eurasia Group warned in a report on Tuesday. "A Biden presidency would try and restore the policy positions of the Obama administration and in most cases go beyond it."