I hate to say I told you so, but it looks like the world is starting to catch up to the fact that the “Trump Bump” isn’t going to happen. As I detailed in my earlier post, stocks have been rallying around Trump while the real economy (wages, job growth – the types of economic factors that impact our daily lives) has been stagnant or growing very slowly, and that is a cause for concern.
Wall Street had hoped that Trump (and perhaps more importantly a Republican government) would bring them what they had been craving for decades – tax reform and entitlement cuts. This was their moment, the moment the business class had been dreaming about since they were drinking out of kegs, finally arrived with billionaire Trump sitting in the White House. What the business class had not factored in was the obvious dysfunction a Trump White House would bring to Washington (as if we needed more dysfunction in Washington), as well as the fact that the market was rallying far before he had even done anything.
This has been the singular issue in the entire economic recovery since the 2008 crash – the stock market has been rallying to new records while the average American sees no change in their daily lives. They are paying more for the same services, making the same amount of money, and seeing the job market dry up – all while Wall Street is all over their TV in a record-breaking rally. It’s no wonder the one uniting factor in our most divided political climate is a resentment for Wall Street. The only thing keeping demand moving has been the artificially low interest rates, so it’s not like the Fed can just cut rates again.
This time, the stock market had hoped that Trump would provide a foundation for the record growth in stock valuation since 2008, but it seems this will not be the case as Wall Street finds itself built upon quicksand. And worse than what happened in 2008, we do not have competent leadership (or good ideas) to help us ride the storm in case of another crash.
So far Trump’s economy looks a lot like Obama’s, with the exception that Obama had been trying to lead our country towards the movers of the 21st century economy – energy independence through solar, wind, and natural gas energy; easy access to community college and training; apprenticeships in the trades; healthcare; automation; etc. Trump has moved against all of this in a totally reactionary shift in policy in an attempt to protect 20th century sectors like coal and manufacturing. So while the United States moves to protect the jobs of the past, countries like China will pass us by with the jobs of the future.
Every 7 or 8 years since the dawn of the market, there has been a recession, and we are long overdue now. How Trump and the Republican government respond to a crisis like this is anybody’s guess.