The Running of the Bulls
With Donald Trump already seven months into his presidency, it is fair to say that his presidency has been dominated by controversy and allegations against him and his administration, the largest of which is undoubtedly the possibility of collusion between the Trump campaign and Vladimir Putin. These scandals have cast a dark shadow over his administration, which has complicated its agenda and caused the American public to have a historically low approval rating for the president. Additionally, it has led many commentators and pundits to allege that President Trump has no significant accomplishments, pointing to his inability to push laws through Congress and onto his desk to be signed. Yet, these individuals are overlooking the largest reason for Trump’s election: the economy.
While some would argue that the economic accomplishments under the Trump administration should be attributed to President Obama, if one looks at the major economic indices and indicators utilized by economists, it is evident that in the final years of the Obama administration the economy was stagnant. With this being said, President Obama deserves much praise for leading this country out the greatest economic downfall since The Great Depression. President Obama led this country through one of the most difficult times economically in its history and lifted the economy out of the so-called Great Recession, but he was unable to produce further expansion.
So what are President Trump’s economic accomplishments? First, since the election, all three major economic indices — the S&P 500, Dow Jones Industrial Average (DJIA), and the Nasdaq — have risen significantly, with the DJIA increasing by 17.8%, the S&P by 15.9%, and the Nasdaq by 24.1%, due to President Trump’s business-friendly agenda. Additionally, there have been over 40 record high days for the DJIA since election day, as compared to only 9 before the election in 2016, and mere 6 in 2015. What do all of these indices and numbers mean for yourself and your family? It means that if you are a stockholder — i.e., if you have a pension plan, 401k, or similar savings account — you have seen a significant income flow in the last nine months, and have left yourself better off for your retirement. More than half, 55%, of American own shares in the stock market, and overall, 80% of the stock market is owned by individuals, rather than hedge funds or other corporations.
But even if you do not fall into the aforementioned category,you probably still benefit as a result of the economic boom under the Trump administration.
According to the Organization for Economic Cooperation and Development (OECD), under the Trump administration the Business Confidence Index (BCI) and Consumer Confidence Index (CCI) have set all-time highs and have broken out of a period of stagnation they entered under the Obama administration. Coupled with the rise of major stock indices, a surge in the CCI and the BCI indicates a significant degree of optimism in the future of the economy and in Americans’ personal financial status, leading individuals and businesses to increase their consumption and investment. As shown in the last few months, this will in turn spur increased growth in the economy and a decrease in the unemployment rate. Currently, the economy is up to 2% annual growth, and the unemployment rate is currently at the lowest rate since May of 2007, decreasing from 4.9% to 4.3% under this administration. Alone, a decrease in the unemployment rate does not always tell the full story of the direction of the American economy, as the measure does not include those who have left the labor force out of lack of optimism in the state of the economy and their ability to find a job. Yet, in addition to the unemployment rate decreasing under the current administration, the Labor Force Participation Rate, which had steadily declined under the Obama administration, even through the revival of the American economy, has reversed course and had begun to rise (0.4%) since the election, another indicator of the confidence the public has in the economy.
The economic accomplishments under the Trump administration are substantial for another reason; the fact that the economy has continued to rally and persevere, despite the inability of the Republican controlled Congress to pass major pieces of legislation through, such as tax reform and repealing and replacing Obamacare, and the decisions made by Janet Yellen, the Chair of the Board of Governors of the Federal Reserve System, to hike interest rates. The ability of the economy to persevere, despite these circumstances, has caused excitement among investors, leading to what I refer to as “The Running of the Bulls” as they recognize the potential for the economy to become even stronger.
Photo credit Bobby Zitzmann/The American Agora