Team Trump: Tout the Real Economy's Gains, Not the Dow
As a 20-year veteran of Wall Street and a close ally of the White House, I care deeply about the intersection of financial markets and Washington policies. Without question, the massive rally in stocks since the Trump triumph in 2016 can be largely attributed to the president’s growth agenda of regulatory and tax relief.
This rally has confounded so-called experts, in both finance and politics, who predicted market calamity should Trump somehow pull off a miracle and actually win in 2016. The world’s largest hedge fund, Bridgewater Associates, warned that the Dow Jones Industrial Average would immediately drop 2,000 points. Liberal Nobel-winning economist Paul Krugman wrote in the New York Times that stocks would “never” recover. Instead, the Dow has surged 7,250 points since the election -- a 40 percent gain.
I don’t blame the president for crowing often about this magnificent validation of his pro-enterprise policies. But I urge him and the other White House messengers to focus more on the incredible gains in the real economy, rather than fixating on the stock market, for three reasons:
First, the stock market also performed well under President Obama. Granted, those gains were based far more on the sugar high of artificially low interest rates practically forcing capital into equities, but it was a long and substantial rally nonetheless. (For the record, I believe that the present ascent will prove lasting because it’s built on fast-accelerating underlying growth and interest rates that are finally, and slowly, rising.)
Second, the profits of stock appreciation flow disproportionately to the wealthiest Americans. Under the last two administrations, economic inequality intensified as asset prices rose and the real economy stagnated, especially for working-class Americans. Thankfully, year one of the Trump expansion provides endless evidence of the opposite trend now – a veritable explosion of productivity, Main Street growth, and optimism across the land. For example, joblessness for Americans without a high school diploma declined in 2017 to a yearly average unseen since the year 2000. Both black and Hispanic unemployment dropped to all-time lows.
Moreover, the quality of those jobs has improved significantly, as December 2017 saw 600,000 fewer workers in part-time positions who wanted full-time jobs, as compared to a year earlier -- just before Trump took office. He has unleashed our factories and, per an Institute for Supply Management survey, American manufacturing registered its strongest year in over a decade. Importantly, these gains are not confined to big business, as the National Federation of Independent Business index of small business optimism reached the highest level in the 45-year history of the survey. NFIB’s chief economist, Bill Dunkelberg, said, “I’ve never seen anything like 2017.”
Third, Mr. President, I’d caution against focusing too much on stocks because even the healthiest markets inevitably see pullbacks and, if you own the upside, it’s difficult to escape blame when stock tremors eventually appear.
A rising stock market creates wealth and should be celebrated, to be sure. But even more than those asset gains, the benefits of policies from Washington now flow not only to the connected crony few, but also to the many. Last January I watched with pride and optimism from the Capitol lawn as newly sworn-in President Trump promised that “every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers.” He has more than delivered on that solemn pledge and we should proclaim loudly and often the burgeoning Trump economic boom as we Make America Grow Again.