It’s not yet clear if the sharp stock market downturn that began Friday will continue for the rest of this week, or whether it marks the end of the current bull market. But it may herald the end of President Donald Trump’s relatively high poll numbers for his handling of the economy.
Trump himself has often conflated the performance of the stock market and that of our economy. While there is some correlation, our rates of inflation, unemployment, and economic growth have a far grater effect on the economic welfare of the average American than the level of the Dow Jones Average.
Still, it would be fair to say that Trump deserves some of the credit for the impressive run-up of stock prices since his election. Surely, all the talk through the summer and fall of a major tax cut – a measure which he strongly supported – helped sustain the stock market rally. And of course, the passage of the tax cut in late December may have kept the rally going through January.
But if indeed, stock prices do not quickly halt their precipitous decline, increasing numbers of Americans will begin blaming the president not just for the fall in stock prices, but for his poor economic stewardship as well.
Perhaps more than any other president in history, Trump takes credit for events over which he has little or no control. But no one expects him to accept the blame if stock prices continue to fall.
In fairness, the president has just a limited amount of influence over our economic performance – and perhaps not a lot more over that of the stock market. You might recall President Herbert Hoover’s predictions that “Prosperity is just around the corner.”
It will be interesting to hear what President Trump has to say – if anything – about the stock market in the coming days. But more importantly, it may be still more interesting to see how our recent stock market decline affects his poll numbers.
In a world in which perception is more important than reality, the president may be blamed for an economic decline that he not only did not cause, but a decline that has not yet even begun to take place.
About the Author
Steve Slavin has a PhD in economics from NYU, and taught for over thirty years at Brooklyn College, New York Institute of Technology, and New Jersey’s Union County College. He has written sixteen math and economics books including a widely used introductory economics textbook now in its eleventh edition (McGraw-Hill) and The Great American Economy (Prometheus Books) which was published in August.