Donald Trump is poised to tout a “blue-collar boom” as he delivers his State of the Union speech to Congress on Tuesday, placing his economic record at the heart of his re-election campaign despite the slump in manufacturing that unfolded last year under his watch.
The address will give Mr Trump a chance to deliver an upbeat summary of his first three years in office and to respond to attacks from the field of Democratic opponents ready to challenge him in November.
It will come wedged between two critical events: Iowa’s chaotic Democratic presidential caucus on Monday night, the results of which were delayed due to vote-counting issues, and a final vote in the president’s impeachment trial, which is expected to result in the president’s acquittal on Wednesday.
A senior administration official said the theme of the speech would be “the great American comeback”, in which the US president would “lay out a vision of relentless optimism” for a country where “the least well off are making some of the fastest gains and where people of every background are finding new opportunities”.
Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think-tank in Washington, said the president’s economic rhetoric had undergone “a remarkable evolution” from “‘American carnage’ in early 2017 to ‘happy days are here again’ in 2020”.
“But the sad reality is that some of the president’s policies were harmful,” Mr Strain said. “Manufacturing is doing very badly so I think the president’s rhetoric on this is very much out of step with the reality of the situation.”
US growth slowed from 2.9 per cent in 2018 to 2.3 per cent in 2019, as business investment and manufacturing took hits due to Mr Trump’s trade wars. Tensions with China — and with allies in the EU and North America — created uncertainty for many US companies, offsetting the stimulus from the 2017 tax cuts and forcing the Federal Reserve to cut interest rates three times last year.
Manufacturing employment fell last year in several swing states in the US industrial heartland that Mr Trump won in 2016, including Pennsylvania, Michigan, Ohio and Wisconsin, according to the Bureau of Labor Statistics. The Institute for Supply Management’s index of manufacturing activity showed a contraction for most of the second half of 2019, only rebounding last month to show a mild expansion.
Sensing Mr Trump’s potential vulnerability in the Midwest, Democrats have chosen Gretchen Whitmer, the governor of Michigan, to deliver their party’s response to his speech on Tuesday night. Sherrod Brown, the Ohio Democratic senator, is bringing an auto union leader from a shuttered General Motors plant to the address as his guest, to highlight what he describes as Mr Trump’s “betrayal” of US workers.
Mr Trump and his supporters will stress that the overall US unemployment rate stands at a record low of 3.5 per cent, consumer spending has remained strong and equity markets have rallied to all-time highs.
“I think success is the best revenge,” Kellyanne Conway, Mr Trump’s communications director, told Fox News in an interview on Monday. “Winning finishes many sentences and the president will show up and barrel through as he always does.”
Mr Trump is likely to defend his trade policies, including the “phase one” truce deal signed with China last month, which averts any escalation in tariffs and commits Beijing to large-scale purchases of US goods and services, and the USMCA deal with Canada and Mexico that revamps Nafta and was recently ratified by Congress with broad bipartisan support.
Trump administration officials have not signalled what the president’s message will be to the EU and the UK, following increased transatlantic tensions in recent months on issues ranging from Iran and Huawei, to digital taxes, aircraft subsidies and agriculture.
US business groups said they hoped to hear more conciliatory messages from Mr Trump on trade. In a briefing with reporters on Monday, Neil Bradley, executive vice-president and chief policy officer at the US Chamber of Commerce, said that while the Trump administration and Congress had “accomplished a lot” in helping keep US joblessness so low, the “headwinds” created by tariffs in manufacturing and agriculture had to be “addressed” or “the boom risks turning into a bust”.
In the run-up to the speech, administration officials have pointed to wage growth for lower-income Americans as a sign their economic policies were benefiting working people. Hourly earnings for production and non-supervisory roles increased by 3 per cent in the year to December 2019, according to labour department data, outstripping both inflation and overall wage growth in the private sector.
However, Michael Linden, executive director of Groundwork Collaborative, a progressive economic policy think-tank, said much of the credit for that goes to state moves, mainly championed by Democratic officials, to raise the minimum wage.
“I think things are still pretty dicey for working people and calling it a boom will come as a real surprise to many who are struggling,” he added.
