March 22-- In the past the Trump administration has boasted of the performance of the stock market as evidence of the success of its policies. Now that the market has begun to drop, White House secretary Sean Spicer has changed his tune.
|Spicer now says that it is unfair to judge the Trump administration's economic policy on the basis of the performance of the stock market. However, the market has done very well since the election and inauguration of Trump resulting in what has been termed the Trump rally. Just back on January 25th this year the Dow Jones Index broke through the 20,000 level. On March 1 the DJI broke through the 21,000 level and the Nasdaq and S&P indices also slashed records. Earlier at the beginning of February, Nouriel Roubini had predicted that the Trump honeymoon with the stock markets would soon be over. Perhaps his prediction is coming true now. Yesterday, the DJI, the S&P 500 and Nasdaq each fell roughly one percentage point. Spicer said: “You can’t look at one indices and say that’s the benchmark for an entire economy. You see confidence levels both in small business and other surveys that show there’s continued confidence in the market.”|
As I write this on the morning of March 22, the Dow Jones is down marginally but still 20,657 a large increase even since he was inaugurated as president though down from it highs. Some type of correction was no doubt to be expected. The S&P and Nasdaq are up marginally. It is really too early to tell whether the Trump Rally is done. Trump is having troubles with his health care bill. He has yet to roll out his tax cuts and infrastructure spending program. When he does so this could boost the market.The Trump administration began to crow about its performance when the DJI broke the 20,000 level. Kellyanne Conway, one of Trump's top advisers tweeted that it was "The Trump Effect". Anthony Scaramucci, a former hedge fund manager tweeted: “Dow 20,000 = big league. Thank you @POTUS @realDonaldTrump”Treasury Secretary Steven Mnuchin also joined the chorus of praise for the Trump administration: "There's a lot of confidence in the Trump administration and in the desire to invest in the U.S. This is a very competitive place to do business. We've got great companies, and you see that reflected in the markets." He also said that the stock market indices were absolutely a report card on Trump administration economic policy. The custom has been for administration officials not to take credit for stock rallies since the opposition will attack whenever there is a stock market decline.It may be that the downturn is just temporary. A Business Roundtable survey of U.S. CEO's last week showed them to be the most optimistic they have been since 2009 and another survey of homebuilders found them the most optimistic since 2005. In spite of all the criticism of Trump and his continual lying and controversial tweets, his administration after all contains an enriched collection of creatures from Wall Street who are just waiting to feed on profits from deregulation, tax cuts and military spending. It should not come as a huge surprise that his administration has had a positive effect on markets. It is much too early yet to say whether the present market decline is a Trump Slump or simply a correction in a continuing Trump rally.