There’s been no shortage of commentary recently about Donald Trump’s approval ratings and you’ll recall that for sometime now, we’ve been closely monitoring some of the key demographics in his base for signs that even the staunchest of supporters are beginning to defect.
Well, Goldman has taken a close look at the numbers in an apparent effort to draw some conclusions about what the President’s declining support might mean for the policy outlook.
The key takeaway for Goldman (and this is the headline from the note that everyone seems to be obsessing over) is this:
Low approval ratings raise legislative risks. In the near term, we believe there is a 50% chance of a brief government shutdown, as the president seeks to solidify support among his base by embracing more controversial positions, despite needing Democratic support to pass spending legislation.
But in our opinion, that’s kind of a throwaway line. After all, it’s completely subjective and it’s (literally) no different than saying “it’s a coin toss” which is probably what anyone in America would have told you if asked.
The more interesting bits from this particular note are the actual shifts in the polls.
For instance, have a look at this chart:
That shift in the “white, without college degree” demographic is “big league.” That’s an 18% decline from inauguration to early this month in a key demographic for the President.
“The decline among white voters without a college degree is particularly striking, as it is generally considered to represent an important component of President Trump’s base of support,” Goldman writes.
Also notable is how detached Trump’s approval rating is from the economy he loves to tweet about (which of course is actually Obama’s economy, but let’s just pretend). Here’s Goldman again:
One way to measure this is to regress presidential approval on economic variables such as the unemployment rate, real disposable income growth, and equity prices through the end of 2016, and compare current levels to the forecasted values. We also include several lags of two non-economic dummy variables: the inauguration, representing the start of the “honeymoon” period in the inaugural year that tends to be associated with higher ratings, and major foreign policy or military events that tend to temporarily boost approval (the so-called “rally ‘round the flag” effect) to get a cleaner read on the effect of the economy on presidential approval.
As shown in Exhibit 3, the president’s approval rating of about 38% in July is about 15pp lower than the 53% that would be predicted based on out of sample forecast from this regression.
The bank goes on to flag the “Trump trade” fade, something damn never everyone with even a remote interest in markets is now talking about.
Here’s an updated chart of the bank’s infrastructure and high-tax baskets which shows that both have erased their election bumps (and then some) as the market completely prices out tax reform and fiscal stimulus:
God only knows what that chart will look like a couple of months after Gary Cohn finally decides to resign.
Finally, there is the ubiquitous visual that compares Trump’s approval rating to history dating back to 1953 and the picture is of course downright embarrassing:
Trump would tell you this is all lies and fake news, but people like Heisenberg aren’t going to believe him “so you know what? It’s fine”…
"so you know what? it's fine".
drunk Donny didn't want to play with you people anyway… pic.twitter.com/LmCWKyyDjD
— Walter White (@heisenbergrpt) August 18, 2017