How the coronavirus crisis could lead to four more years of Donald Trump
- The US president could play the epidemic like a trump card in his re-election campaign. Even if the outbreak were to affect US economic data, the Federal Reserve would surely ease policy and then Trump would no doubt claim credit for it
Taking the data at face value, the US economy is doing pretty well. Trump has been understandably quick to claim credit for that, as any US president would.
It might therefore be logical to assume that Trump’s re-election prospects would suffer if the spread of Covid-19 were to have such an impact on the global economy that it began to negatively affect US economic data, or if a coronavirus-related dent in American corporate earnings weighed on lofty US equity prices. But that might be to draw the wrong conclusion.
Minutes of the Federal Reserve’s January 28-29 meeting revealed that participants “generally saw the distribution of risks to the outlook for [US] economic activity as somewhat more favourable than at the previous meeting”, while acknowledging that the threat of the coronavirus “warranted close watching”.
With the US unemployment rate at a very low 3.6 per cent and no sign that the Fed has concerns about inflation taking a marked upturn, US central bank policy looks to be on autopilot for the time being.
Indeed, as the Fed’s vice-chairman Richard Clarida told CNBC last Thursday: “The fundamentals in the US are strong: sustained growth, strongest labour market in 50 years, price stability with inflation close to our goal. It’s a good picture.”
