President Trump and congressional Republicans have spent much of the past year trying to connect a giddy stock market rally with their economic agenda, but stocks' precipitous plunge in the past five days has delivered a sobering reality: What goes up can come back down — quickly and with little warning.
With Monday's steep fall, Trump has presided over the biggest stock market drop in U.S. history, when measured by points in the Dow Jones industrial average. The free fall began in earnest Jan. 30 and snowballed Friday and Monday, for a combined loss of almost 2,100 points, or 8 percent of the Dow's value.
It is also unclear if the past week will amount to a small correction or the beginning of a painful slide that many investors said was overdue.
Trump's economic team is largely untested in periods of economic uncertainty. Many investors and lawmakers are watching the actions of Trump's newly sworn-in pick for Federal Reserve chairman, Jerome H. Powell, to see how quickly he is willing to raise interest rates in the face of rising inflation.
Treasury Secretary Steven Mnuchin briefed Trump on the market's fall Monday during a trip to Ohio, where the president made no mention of the financial troubles in public remarks. Mnuchin is a close Trump adviser, but his views on how the government should respond to market volatility are not well-known since he had little experience in Washington before joining the administration.
Stock market spikes and blips are not uncommon, though the swing in the past week was highly unusual because of its sustained fall.
And Republicans' repeated swooning about the stock market's performance in the past year opened them to criticism that they should take some responsibility for the past week's poor performance. Some of the investor anxiety is directly related to heightened fears about the growing budget deficit, which is widening under the new GOP-backed tax law.
"Any time you claim credit for an increasing stock market, you risk having to take the blame for one that decreases," said Sen. Ron Johnson (R-Wis.). "Markets move in strange ways."
The fall began on the same day as Trump's State of the Union speech, in which he boasted that "the stock market has smashed one record after another, gaining $8 trillion in value."
The stock market closed Monday at its lowest levels since early December, though it is still up substantially since Trump's inauguration.
Many analysts had warned that the stock market was overheated and due for a correction. But White House officials continued to boast about its performance, particularly as Trump's approval ratings lagged for much of 2017. The stock market was one measuring stick that they sought to connect closely with his time in office, believing that Americans would eventually come around if they felt the economy was getting better.
"The reason our stock market is so successful is because of me," Trump told reporters on Air Force One in November.
There have been signs in recent weeks that Trump's approval rating has improved, particularly as he and other Republicans have worked to portray decisions by a number of companies to offer bonuses and raise wages as a direct result of the tax cuts. Sustained stock market losses, however, could undermine the president's effort to take credit for a growing economy ahead of the midterm elections in November.
A Washington Post-ABC News poll in January found 58 percent of respondents rating the economy positively, up seven points in the past year and the highest level in 17 years. But fewer than 4 in 10 said Trump's administration deserves significant credit for the economy's condition, compared with half who said the Obama administration does.
"The perception of a growing and healthy economy is key to Trump's success as president," said Neil Newhouse, a Republican pollster. "The unnoticed number that people haven't paid attention to is the improving mood of the country, the right-direction number. When that goes up, presidential approval goes up, and the condition of the economy is tied very strongly to that right-direction number."
There have been numerous signs that the economy was continuing to improve, but again and again, Trump kept coming back to the stock market as his primary barometer for success. That focus could complicate the White House's efforts to distance the president from the reversal.
"The tricky part of claiming credit for the stock market is the stock market can go up and the stock market can go down," said Andy Laperriere, a partner at Cornerstone Macro, a Wall Street advisory firm.
He said there was a sense among many investors that the stock market had become overvalued and that much of the recent increase was what he referred to as "air."
"And once the air comes out, people are headed for the exits," he said.
It's unclear how much more air will come out, which is one of the reasons investors are so wary. The stock market surged last year because of sustained global growth combined with enthusiasm for Trump's tax plan and his effort to pare regulations. But there are new worries about inflation, higher debt levels and rising interest rates that have fueled volatility in recent days.
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) told reporters Monday that the stock market fall reflected good news about the economy, as it showed that higher wages were adding to inflationary pressures that the Fed would need to address.
"Corrections like this are normal," Brady said.
Trump delivered a speech on his economic agenda Monday that didn't mention the stock market once, a rare occurrence for him. After tweeting incessantly about the stock market in 2017, Trump has stopped since Jan. 20.
"The President's focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment, and increasing wages for American workers," White House press secretary Sarah Huckabee Sanders said in a statement. "The President's tax cuts and regulatory reforms will further enhance the U.S. economy and continue to increase prosperity for the American people."
In 2017, the economy grew at a slightly better clip than the year before, but job creation appeared to plateau and wage gains remained modest. The Dow, which grew 25 percent last year, was a bright spot for White House officials, reflecting what they believed was robust enthusiasm for Trump's agenda.
In a Dec. 19 Twitter post, Trump wrote: "DOW RISES 5000 POINTS ON THE YEAR FOR THE FIRST TIME EVER — MAKE AMERICA GREAT AGAIN!" It was the 58th time since taking office that he had mentioned the stock market on Twitter.
The last time he mentioned the stock market on Twitter was on Jan. 20, a day after the Dow closed at 26,072. The 30-stock index has fallen more than 1,700 points since.
Trump used to ridicule the stock market before taking office, saying in September 2016 that recent gains in the market were a result of a "big, fat, ugly bubble" that would pop once interest rates increased.
The stock market's steep fall in the past week has prompted a number of Democrats to pounce, saying Trump should shoulder some of the blame.
President Barack Obama took office when the economy was cratering, and he saw the stock market bottom out several months into his first term. The stock market would more than double before he left office, but his economic team was often cautious about wading into speculation on how the stock market would perform.
Jay Carney, Obama's former press secretary, wrote on Twitter on Monday: "Good time to recall that in the previous administration, we NEVER boasted about the stock market — even though the Dow more than doubled on Obama's watch — because we knew two things: 1) the stock market is not the economy; and 2) if you claim the rise, you own the fall."
Brian Riedl, a former adviser to Sen. Rob Portman (R-Ohio) and two GOP presidential candidates, said presidents frequently try to highlight good economic news, opening themselves to criticism when bad news emerges.
"All presidents take credit for good economic news, whether it's economic growth or the stock market," he said. "And as a result they are going to get the blame when the party ends."
Some key members of Trump's economic team are in transition. White House National Economic Council Director Gary Cohn, a former president at Goldman Sachs, could leave soon, and it is unclear if Trump would bring in another markets expert to replace him. Decisions by Powell, the new Fed chair, about how and when to raise interest rates could also have a direct effect on the stock market's performance.
Trump has told advisers that the economy would be the GOP's calling card heading into elections in 2018 and 2020. He has said the stock market's increase has led to a ballooning of 401(k) and other retirement accounts, a connection that has made some aides wary because many of his supporters don't hold such investments.
He often asks about the market several times a day, aides said, and he will occasionally flip his television to CNBC to check for himself.
Stephen Moore, who served as an economic adviser to Trump during the campaign and has cheered the new tax law, said Monday that the stock market is still up sharply from the day Trump was elected in 2016. But he conceded that it is unclear whether the recent plunge is the beginning of a downturn.
"The Dow gyrates much more than these other economic statistics," Moore said. "Who knows? The Dow could be up 500 points tomorrow. Or it could fall 500 points."
Josh Dawsey, Philip Rucker and Scott Clement contributed to this report.