How has the S&P been performing under President Donald Trump? The Trump Administration made a lot of claims regarding the performance of the economy, but how accurate are they? The S&P has been in a free fall as of late, but much of it has to do with issues of manufacturing. Yet just a week ago, information about a US-China trade deal was propping up the DJIA.
There has been a lot of spin from various news outlets on coverage of the economy — usually with supporters propping up Trump’s accomplishments, and with his critics downplaying them. Let’s take a clearer look at the facts.
Better than Bush and Reagan
Trump’s often been compared to the late President Ronald Reagan, and there’s a lot to compare. Trump has repealed many business regulations, thereby making it easier for businesses to grow. And despite the trade war, it appears as though the S&P 500 has actually performed better than both Reagan and President George Bush under Trump’s watch. Trump’s presidency isn’t over, and most presidents saw only modest gains during their first four years, and more significant gains throughout the last four years.
When comparing the recent presidents, George Bush was the president who did the worst — though much of this had to do with the financial crisis, which had been building for some time. Reagan did extremely well until the last half of his last term, when the market sharply dropped on Black Monday.
Interestingly, the market performed the best under Clinton by an extremely wide margin, which is the only other recent president to have experienced an impeachment.
Staving Off Recession
When looking at the numbers, it’s important to note that Trump made several business-friendly changes, which included a major tax overhaul. During that tax overhaul, businesses boomed, and the DJIA soared. It’s possible that these changes were actually what staved off the recession, which analysts have been discussing as “coming” for years.
It’s easy to see a recession as coming when you look at the current volatility of the market. A recession is due, but every time the market falters, it gets picked up again. Despite many believing that the market should crash at any time, it hasn’t been. Instead, the market has been seeing steady and substantial growth, as wealth continues to accumulate inside of big businesses.
The Business President
Trump’s claims that he’s good for business owners are fairly easy to back up. Business owners have paid substantially fewer taxes under Trump, and have been able to reinvest these funds into their own infrastructure, thereby bolstering them and ensuring that they are (for now) recession proof.
But there are some issues, namely the current US-China trade war. This war can go one of two ways. If can continue to hurt industries, making American businesses fail. Or, it can ultimately negotiate preferred contracts with China, which is becoming a major superpower.
There’s every indication that both the United States and China are currently hurting from the trade war, and the people who are impacted most tend to be small businesses and consumers. If this continues, businesses could start to fail eventually because of a strong reduction in consumer spending.
But it’s also undeniable that China has become an incredibly powerful adversary to the United States, pulling a significant amount of manufacturing through it, and undercutting US prices through the use of stolen IP. Stolen IP, in particular, has become a major problem for United States companies, as any innovation that occurs within the US is quickly taken to other shores.
The Future of the S&P
Trump’s S&P performance shows that it’s not unwarranted for him to state that the economic condition of the United States is thriving. It’s inarguable that quite a lot of it is a gamble. The hope is that businesses are going to invest more in their companies and their local economies, and that they will be able to prop up the economy. The further hope is that the war with the United States and China will be won. If the war with China isn’t won, there could be major consequences later on.
At the same time, a lot of the economic condition is also environmental, and separate from the presidency. As seen with Bush, a financial crisis can occur because of confounding events, and can be inevitable — which the next recession likely is.