After a long absence, another “Stock Market up” tweet was issued Wednesday by Donald Trump. He’d been the troubadour singing his own praises when the Dow Jones industrial average hit new highs, but when falling stock prices wiped out most of the gains for 2018, the music stopped. He was back even though the Dow was still sharply down for October.
On down days, Trump blames the market lows on Federal Reserve Chairman Jay Powell. Powell’s been raising interest rates, a concern for stock investors. Trump told the Wall Street Journal Editorial Board that he appointed Powell expecting “a low-interest-rate guy.” (Trump also reportedly believed that he could more easily influence Powell than the other candidates.)
Turns out that Powell is running an independent Fed, as he should. And no, the Fed is not raising rates to rain on Trump’s “winning” parade. The Fed is raising rates because that’s what a responsible central bank would do at this time of strong job numbers and a long-running economic expansion. Yes, the rates were kept very low during Barack Obama’s tenure, but that was also normal policy, seeing as we were in the jaws of a deep recession. Hence the Journal’s headline: “Trump Flunks Fed Politics.”
Presidents only partly control what happens in the economy. And as we keep hearing, the stock market is not the economy. Still, Trump takes ownership of the Dow when it sizzles. This year, it mostly hasn’t. And if you’re going to use numbers taken out of economic context, even his sizzle has been exaggerated. In Trump’s first year in office, the S&P 500 rose about 23 percent. In Obama’s first year, it was up 43 percent.
