As the Dow Jones industrial average climbed to new heights early this year, President Trump clamored for credit.
He might regret the campaign to claim ownership of the economy if a sudden pullback turns out to be more than just a blip.
The Dow plunged 666 points Friday, prompting the Wall Street Journal to declare that “correction watch is on,” then tumbled another 1,175 points Monday. The market has fallen 8.5 percent since closing at an all-time high on Jan. 26. A correction would be a 10 percent drop in a short period of time.
Any nuanced view of the stock market acknowledges that many factors can affect prices. No president — certainly not one who has been in office for barely a year — is singularly responsible for surges or declines.
But Trump has suggested that stocks would have “tanked” if not for his victory, and he has complained that the media devotes insufficient attention to the strong market, which he counts among the “many things accomplished by the Trump administration.”
“The stock market has smashed one record after another, gaining $8 trillion and more in value in just this short period of time,” Trump said in his State of the Union address last week, referring to gains since Election Day 2016.
Trump has not yet convinced voters that the economy is his, however. A January Washington Post-ABC News poll found that Americans still consider the Barack Obama administration more responsible for the state of the economy than the Trump administration.
In time, Trump, like every president, will become more closely associated with economic conditions on his watch. But he has seemed eager to accelerate the process.
The risk is that the president's message — that we're in the Trump economy now — will sink in at precisely the wrong moment. If we are experiencing a correction, then the credit Trump has been seeking could flip to blame.
Obama's former press secretary, Jay Carney, tweeted a warning along these lines on Monday:
As the Dow slumped again Monday, The Washington Post's Thomas Heath laid out some possible explanations:
Foreign indexes were down across the board as worries over inflation and rising U.S. Treasury bond yields swept through financial markets. The FTSE was down 1.22 percent and the Nikkei 225 was down 2.55 percent.
Blackstone Group chief operating officer Tony James said in an interview on CNBC’s Squawk Box Monday that the market was “fully valued” and that a 20 percent correction was possible in 2018.
“You could easily see a 10 to 20 percent correction sometime this year,” James said.
The market volatility arrived last week after an unusually long period when it appeared there was no stopping its upward march. The S&P 500 in January saw its 10th consecutive monthly gain, the longest in 59 years.
Ironically, Friday’s markets went tumbling on good economic news as the Labor Department reported a 2.9 percent increase in hourly earnings. That’s good news for workers but creates nervousness among equity investors concerned that the rise will stoke inflation.
One of the big worries is that the Federal Reserve, under new chairman Jerome H. Powell, will accelerate its interest rate hikes, slowing the economy and markets with it.
Trump, who recently blamed a journalist for a 350-point drop in the Dow, isn't likely to accept responsibility for the latest fall. And, in truth, it would be a gross oversimplification to say the decline is all his fault.
But Trump has exposed himself to finger-pointing by framing the market as a reflection of his work.