President Trump is likely to win re-election thanks to the strong economy and an uncertain primary race in the Democratic Party, investment giant Goldman Sachs says.
Goldman analysts compiled a report which gives the president a ‘narrow advantage’ over potential rivals for the 2020 general election, which is some 19 months away.
According to economists Alec Phillips and Blake Taylor, Trump currently has an edge over any potential Democrat due to the usual advantage enjoyed by incumbents.
‘The advantage of first term incumbency and the relatively strong economic performance ahead of the presidential election suggest that President Trump is more likely to win a second term than the eventual Democratic candidate is to defeat him,’ the analysis, which was obtained by Bloomberg, found.
‘President Trump is more likely to win a second term than the eventual Democratic candidate is to defeat him,’ according to experts at investment banker Goldman Sachs
Goldman experts predict that the U.S. economy will grow 2.5 per cent this year and 2.3 per cent in 2020.
That rate of growth should reduce unemployment from 3.7 per cent this year to 3.3 per cent next year, the analysts say.
Phillips and Taylor believe that the relatively low unemployment and the rise in income levels are better indicators of how a presidential election will turn out than other factors.
Experts will pay particularly close attention to the performance of the economy in the second quarter of next year.
Still, the analysts do take into account the fact that Trump’s overall approval rating, which is below 50 per cent, means that he is far from a sure thing for re-election.
The Goldman analysis predicts that the 2020 election will be a ‘close call,’ according to Yahoo Finance.
‘President Trump is more likely to win a second term than the eventual Democratic candidate is to defeat him,’ the Goldman analysts wrote.
‘While we believe the majority of market participants expect President Trump to win a second term, we note that prediction markets point in the opposite direction and imply that the Democratic candidate has a 56% probability of winning and the Republican candidate has a 44% chance.’
Goldman says that the absence – so far – of a clear frontrunner among Democratic candidates also gives Trump an edge.
‘At this early stage with so many candidates, it is nearly impossible to predict who among the roughly 20 announced and potential Democratic candidates will win the nomination,’ Phillips and Taylor wrote.
‘That said, we would make two observations.
‘First, while the eventual nominee often trails in the polls in the year before the election, they typically have at least some base of support and poll in the double-digits.
Goldman says that the absence – so far – of a clear frontrunner among Democratic candidates also gives Trump an edge. Early polls give an edge to former Vice President Joe Biden (left) and Senator Bernie Sanders (right) of Vermont
With such a large pool of candidates, ‘the odds are higher than usual in this election cycle that the eventual Democratic nominee could emerge from further down the list,’ according to Goldman Sachs. South Bend Mayor Pete Buttigieg (above) announced his candidacy Sunday
‘At the moment, only [Biden and Sanders] poll nationally in double digits.’
With such a large pool of candidates, ‘the odds are higher than usual in this election cycle that the eventual Democratic nominee could emerge from further down the list,’ according to Phillips and Taylor.
‘However, even in the crowded 2016 Republican primary, we note that by the time of the first debate then-candidate Trump was polling at over 20%,’ analysis stated.
The economists also note that Trump is more likely to benefit if a third party candidate like former Starbucks CEO Howard Schultz jumps into the race.
‘In early head-to-head polling, polls that include potential independent candidate Howard Schultz typically reduce the Democratic vote share by around 2 [percentage points] more than the Republican vote share,’ the analysis found.
Schultz has said he is considering jumping into the race as a ‘third-party centrist,’ though liberals fear that his relatively dovish views on issues like climate change and immigration could siphon votes away from the Democratic nominee.
In early polls, former Vice President Joe Biden has emerged as the favorite to win the Democratic nomination.
Biden, 76, is slightly ahead of 77-year-old Senator Bernie Sanders of Vermont.
They are the two clear frontrunners ahead of a crowded field that includes rising star Mayor Pete Buttigieg of South Bend, Indiana; Senator Kamala Harris of California; Senator Elizabeth Warren of Massachusetts; Senator Cory Booker of New Jersey; Senator Kirsten Gillibrand of New York; and former Texas Congresman Beto O’Rourke.