President Donald Trump took credit again for the surging stock market this morning, after it hit another high on Tuesday. “Stock market hit new Record High yesterday,” he tweeted out. Record High was capitalized, no doubt in case the casual reader missed it.
Trump’s constant insistence that he is fully responsible for the current stock market and economic run up is a risky bet. It isn’t just that this is inaccurate. It’s also that, should the American economy or stock market hit a rough patch, Trump will get stuck holding the bag.
Even without Trump pouring fuel on the fire, it is the popular understanding that if the economy is humming along, the president gets credit. If things are not going so smoothly, the president generally gets the blame.
In reality, Trump inherited a strong economy from Barack Obama, as headlines from the end of last year like Politico’s “Trump Inherits Obama Boom” demonstrate. The S&P 500 increased by more than 200 percent while Obama was president, while hitting 127 record highs. But, as I am sure you don’t need me to remind you, Obama is no longer president. After almost a year, it’s no surprise people — both those who voted for him and those who did not — are now crediting Trump for his economic stewardship. Unemployment is currently hovering around 4 percent, the stock market is high. Donald Trump is the president. That’s how it goes.
This explains why even though Gallup found a dismal 38 percent of voters approve of Trump’s presidential performance a slightly less dismal 45 percent believed he was handling the economy correctly. That, in fact, was Trump’s best number in the survey — a little more than 30 percent said the same about the president’s moves on healthcare or foreign policy.
Democratic pollster Peter Hart recently found that even focus group participants who didn’t vote for Trump said the president was doing a good job in this area. As the Los Angeles Times reported:
Trump wants to “bring the economy jobs — infrastructure, construction,” said Katrina Harrell, a 38-year-old black self-employed businesswoman who voted for Hillary Clinton last year. Harrell was extremely critical of almost all other aspects of the administration, but on the economy she gave Trump credit.“I think those are good moves,” she said. “I mean, that’s what he knows — business.”Another Clinton voter, Jacob Eubank, a 35-year-old, white administrator at the University of North Carolina campus in Wilmington, shared a similar view.“I think he’s good just for the stock market,” he said.Michael Leimone, a 41-year-old cook who voted for Trump last year but now finds him disappointing, praised his economic record.“I think he’s turning it in the right direction,” he said.
But all good things do eventually come to an end — including stock market run-ups and economic expansions — and that could very well happen while Trump is president. If so, it may have nothing to do with the current administration at all.
Of course, there are scenarios in which an economic setback might well have a lot to do with policies Trump supports. For instance, the National Association of Realtors has claimed that if a tax reform package passes that eliminates the ability of homeowners to write off state and local taxes, it could cause a ten percent drop in housing values. Given that more Americans own homes than invest in stocks, that could create economic trouble.
Still another group suspects the stock market run-up is happening because many investors believe tax reform will.happen. . No tax reform, say goodbye to the stock market rally. That’s what Treasury Secretary Steve Mnuchin says. As he told Politico last month: “To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done, you’re going to see a reversal of a significant amount of these gains.” BlackRock CEO Larry Fink says something similar.
If the stock market does fall or the economy nosedives, my guess is he will try to blame Hillary Clinton, Barack Obama, members of Congress he’s feuded with and, well, anyone but himself. But Trump’s approval ratings are low and things are actually going okay right now, at least as far as the economy is concerned. His alleged economic prowess is probably his best remaining selling point. If the economy turns south, whatever the reason, his approval will deteriorate even faster.