Sunday, April 15, 2018
The Trump Slump
You might recall Trump loved to gloat about the rapidly rising stock market, even before he took office. The Dow rose roughly 2,000 points just during his transition period from Nov. 8, 2016 through Jan. 20, 2017, and continued to rise precipitously throughout his first year in office, peaking at 26,616 on Jan. 16, 2018. Since then, the Dow has slumped more than 2000 points and sits at 24,360. Some might call this a "correction," but it seems that Trump's policies are beginning to take their toll on the economy and he can no longer ride the wave that was a carry over from his predecessor's term of office.
The stock market has always been a fickle thing. Obama experienced similar down cycles, like one between Nov. 6, 2015 and Feb. 12, 2016, where the Dow fell roughly 1900 points before beginning its upward growth once more. It regained all that it had lost by June, and was rising at a steady clip prior to the 2016 general election, not that it did Hillary Clinton any good.
By November, pundits were calling the rising stock market the "Trump Bump," and the Donald was loving every minute of it. When the stock market breached 20,000 euphoria set in, with the same pundits who had been berating Obama's economic record, now calling it a Boom! Hats were made to commemorate the event in a variety of colors but red was the favorite, befitting Trump's signature red MAGA cap. The Donald took full credit for the rising economy.
Of course, there were those who chose to rain on his parade, pointing out that all the elements were in place long before he took office for this boom to occur. Hillary could have just as easily been enjoying this rapidly growing economy as much as Trump, but alas she had to watch it from the sidelines. For his part, Obama took some well deserved R&R, jaunting around with Richard Branson in the Caribbean. Everyone seemed content to let Trump enjoy the fruits of a strong economy that was none of his doing.
Economists knew that what goes up will come back down eventually, and here we are in April watching an economy start to shrink, as early expectations of a stratospheric 5.4% growth rate for the first quarter of 2018 slipped to 1.8% by March, and now it seems we will be lucky to break even. No official figures have yet been released. Remember this is a guy who promised a 4% rise in GDP per annum, which has yet to be reached for even one quarter. His best quarter was between July and September of 2017, when the GDP rose 3.2 per cent.
The tax cuts and deregulation of the economy designed to see the Dow soar in 2018 failed to materialize. It seems a lot of investors grew squeamish, fearing another 2008 in the making and decided to hedge against these wild expectations. As a result, Trump has become uncharacteristically quiet about the economy. You don't hear him crowing about the Dow these days.
It's not just the unfavorable trends in the economy but his on-going battle with Jeff Bezos, his ill-advised decision to impose tariffs, and numerous other tweets that point to a White House that has little idea what is going on in the economy right now. Republicans in Congress similarly appear to be at a loss for words to explain what is happening, with no less than the House Speaker himself announcing his retirement rather than face the ugly prospect of a tough re-election bid in November. Republican legislators are leaving it to Trump to bear the brunt of this sagging economy on his own.
Needless to say, His Trumpness is none too happy about all these rats abandoning ship. The Donald is not the kind of guy to accept responsibility for anything less than a great success. He may have signed onto the GOP tax cut bill, which was jammed through Congress. They all knew full well it would only bloat the national deficit with few benefits for the Middle Class, but he will blame Congressional leaders for its shortcomings. That's the price you pay to satisfy your big money donors like the Mercers and the Kochs.
As Henry Ford said a long time ago, if you want a strong economy you have to have a strong Middle Class that can afford to buy your products. Everything the Republicans have done these past 15 months has gone against the grain of this cardinal rule, and most recently passed a bogus balanced budget amendment in the House that would strip Social Security of its $2.9 trillion surplus to help offset soaring federal budget deficits projected over the next three years. This heinous bill is not likely to pass the Senate so easily.
Republicans have long considered themselves savvy businessmen, lamenting how much more effective government would be if it were only run like a business rather than some kind of charity work. This attitude is what opened the door to Trump, who claimed to be the greatest businessman in the world, despite his many dubious real estate deals and numerous bankruptcies. Just the same, a large cross section of America bought this notion, and now like those Trump University students are filing a class action lawsuit in the form of recalling their Republican state legislators and US representatives.
Not only have the Republicans managed to bankrupt government once again, but they seem to have no idea how to get the economy moving again. You hardly heard a peep from the GOP when Trump announced his tariffs, content to let him have his way, even though the tariffs were decried by many leading conservative economists. Reason no longer prevails in the GOP. They seem to be working on some primitive survival instinct, hoping to get as much as they can from government before retiring as Paul Ryan is doing. This from a 48 year-old legislator who wanted to raise the retirement age to 70 and also slash social security and medicare benefits.
They are not just rats, but double rats, as Holly Golightly would say. Yet, there are many in this country who still would not vote for a Democrat under any circumstances, determined to keep these rats in power for no other reason than ideological. This helps explain why Trump still enjoys a daily presidential tracking poll of around 50% from Rasmussen despite what appears to be a White House in total chaos, and why Republicans continue to do well in generic polls. It's enough to just make you want to fly off to Brazil.
The good thing is that these generic polls look a lot different when actual faces emerge. I don't think it was quality time with the kids that led Ryan to this decision. Wisconsin is very much turning blue again and there is nothing he or Scott Walker can do to stop it. Young Paul Ryan saw the writing on the wall as many Republicans have done. They will most likely lose control of Congress in November, and the way the special investigation has turned on Trump, it looks like his days are numbered as well. Mike Pence may finally get his dream but will be forced to preside over a Democratic Congress in 2019, that's assuming he doesn't get dragged into the ever widening net of Mueller's investigation, as was the case with Spiro Agnew back in 1973.
As the Dow goes, so do Trump's fortunes. I guess you call this the "Trump Slump." He can only hope it rebounds to restore some confidence in his self-professed economic abilities. But, as long he keeps pushing these tariffs and other punitive measures it isn't very likely. His worst nightmare is that the Dow may very well hit 20,000 again, but this time from the wrong direction.