Little will change until it costs you lots of money

It will likely take something close to this to substantially move the public's perception of Trump.

Perhaps you, like me, are incensed that our Supreme Court disregards open, expressed religious animus to uphold terrible public policy. 

And maybe you are still furious that we are entertaining bad-faith arguments about who gets to eat at a nice restaurant instead of condemning what seems eerily close to kidnapper's demand: give up your due process rights and the feds will return your children. 

You might have read Michelle Goldberg's op-ed in the NYT today and said to yourself, "Yes. All of this."

Though it’s tiresome to repeat it, Donald Trump eked out his minority victory with help from a hostile foreign power. He has ruled exclusively for his vengeful supporters, who love the way he terrifies, outrages and humiliates their fellow citizens. Trump installed the right-wing Neil Gorsuch in the Supreme Court seat that Republicans stole from Barack Obama. Gorsuch, in turn, has been the fifth vote in decisions on voter roll purges and, on Monday, racial gerrymandering that will further entrench minority rule.

Then you read the umpteenth profile of Trump voters and note that Trump's overall approval ratings are creeping up and Republicans approve of him at the same levels they did of George W. Bush, post September 11.

You, like me, might not be stunned so much as a little more cynical. What's it gonna take, huh? How is democracy supposed to work when public opinion doesn't shift much when terrible things are happening?

***

The answer is that we likely won't see a significant change in public opinion until a recession hits. 

One of the more boring truisms of American politics is that politicians in office will, by and large, remain popular when the economy is doing well. If the economy starts to slow, the ruling party is in trouble.

- In 2012, the economy was on its way up, but growth was slow. Barack Obama won small, decisive re-election and the GOP continued to control Congress.
- In 2010, the economy was still in recovery so the Republicans took back both houses of Congress.
- In 2008, the economy was in crisis, and voters elected Barack Obama by a large margin.
- In 2006, the economy was slowing down, though not yet in crisis. Democrats took both houses of Congress. 
- In 2004, the economy was doing well. George W. Bush was comfortably re-elected and Republicans stayed in control of Congress.

It's not that other political issues don't matter. They do, somewhat. For example, major factors in 2006 -- the last Democratic congressional wave -- included the fallout from the Bush administration's mishandling of Hurricane Katrina and growing public exhaustion with the wars in the Iraq and Afghanistan. It was also a mid-term election taking place during an incumbent's sixth year in office -- historically, when voters tire of the president's party. 

A slowing economy in 2006 made all of the above factors much more relevant and drove a massive Democratic victory. 

A bad economy is often the final push that drives dissatisfied voters to the polls, especially in years where the president isn't on the ballot. 

***

If you are a campaign manager and want to put an incumbent out of a job, two methods are the most effective. One is to change the votes of the 5% or so of people who always show up to vote, but regularly split their ballot between the parties. The other is to bring out people who are generally on your side, but typically remember to vote only in presidential years (if that -- see the Democrats in 2016).

Both are difficult to do. When the economy goes south, though, it becomes much easier. A pissed off voter is one who remembers to show up and vote for the out-of-power party.

This happens because voters pay attention to the stock market and jobs. They notice if interest rates are up because it's costing them money when they want to buy a car or take out a mortgage. Voters see if their retirement savings are stagnating or losing value. If their employer, or a relative's, is laying folks off, then they will take their anger out at the polls.

***

The thing about much of our current news is that it's mostly just angered the same people who were already going to vote for a particular party. (Come November, I may vote so hard that I punch a hole through the screen. I can imagine that some of my Fox News-watching compatriots feel the same anger, though directed at a different place.) 

Knowing that, this story in the NYT caught my attention and made me glad that once upon time, I earned an economics degree. (You are forgiven if you skipped over the article after seeing the term "yield curve" in the headline.)

Every recession of the past 60 years has been preceded by an inverted yield curve, according to research from the San Francisco Fed. Curve inversions have “correctly signaled all nine recessions since 1955 and had only one false positive, in the mid-1960s, when an inversion was followed by an economic slowdown but not an official recession,” the bank’s researchers wrote in March.

What's a yield curve? In short, it's the difference between short-term and long-term bond interest rates. Normally, the rate on the long-terms bonds are higher than the short-term. Among other things, this is how banks can make money -- they take in money at long-term rates and loan it out at short-term rates. Pocketing the difference between the two is one way banks make money. 

If the rates invert, banks aren't profiting from loans and will put the brakes on many types of loans. This matters because debt fuels the American economy.

Currently, the long and short-term rates are close to equalling each other, but haven't yet inverted. It may not lead to an immediate recession, but there's reason for pessimism about the long-term economy -- say, a couple months to two years from now.

From the NYT:

The yield curve, once it inverts, has a track record of signaling that a recession is coming.

percentage points

4

2

0

-2

0.34 pct. pts.

’85

’90

’95

’00

’05

’10

’15

⟵Recession

This downward trend is what a flattening yield curve looks like.
↙     

Another way of thinking about this is the economy is cyclical. It's been growing for about eight years. That's a long time in the life of a growth cycle. Eventually, there will be a correction. 

If it happens by this fall, Trump will see a chunk of his popularity erode and a bunch of GOP congressmen will lose their jobs. Trump's administration will then spend the next two years answering subpoenas from a Democratic congressional committees. If a Supreme Court seat is vacated, Democratic senators could channel Mitch McConnell and leave it open. 

So, you know, nothing big riding on this.