What a Stock Market Difference Trump 2.0 Makes – Currency Thoughts
What a Stock Market Difference Trump 2.0 Makes
March 10, 2025
During the first seven weeks after Donald Trump took office as the 45th president of the United States, the S&P 500, Dow Jones Industrials, and Nasdaq respectively logged gains of 4.6%, 5.4% and 5.5%. And so began what proved to be multiple years of dynamic growth in corporate earnings and U.S. share prices, along with price stability in which a 1.9% per year rise in consumer prices nearly matched the Federal Reserve’s medium-term target. That performance gave Trump a big edge over Democrats in last year’s election. By far, opinion polls consistently cited “economic performance” as voters’ top priority, and Trump was perceived as the more reliable candidate on that metric because of how the economy behaved prior to Covid. VP Harris was given low marks because of the high elevation of inflation during 2021 and 2022.
In the first seven weeks of President Trump’s non-consecutive second term as the nation’s 47th president, the story told by equity values has been very different. As of today”s market closing in N.Y., the S&P 500, Dow Jones Industrials, and Nasdaq were flashing red, with substantial declines this session and losses since Inauguration Day of 6.4%, 3.6%, and 10.9%, respectively. Not since the recession of 1990-91 has the U.S. economy faced a stagnationary risk such as sensed now, and it’s been over four decades since the last sustaining bout of real economic contraction with greatly excessive inflation. The Trump team’s policy agenda of massive deportations, broadly-based sharp increases in tariffs, and widespread layoffs of government workers with whole departments being eliminated is far different from the Trump 1.0 experience, and investors fear that such will steer the economy into recession and a burst of higher inflation.
To be yet determined is whether voter sentiment takes a cue from financial markets and likewise sours on the Trump agenda and, if so, whether either an autonomous shift in policy plans by the Trump administration ensues or effective political and/or constitutional push back modify the course America has set for itself. It’s also possible that the feared combination of higher inflation and negative to very low growth doesn’t play out even if Trump’s current policy intentions are implemented in full. All of these ifs remain just hypotheticals.
Number one, Trump’s voter approval ratings have moved far less than the thumbs down from financial markets would suggest, but that is consistent with the unflappable ratings of his hard base since 2016, impervious to a wide range of developments that seemingly would have hurt any other political figure.
Number two, advisers to Trump were selected foremost for their loyalty, and virtually universal Republican solidarity with his wishes seemingly hinges not on agreement with every action but fear that stepping out of line could demolish their careers or worse. Policy modifications, if any, will almost certainly stem from the top. As a strongman leader whenever cornered, his highly effective strategy has repeatedly been to double-down on his position.
Number three, so much is different in the U.S. and global economies from times long past that precedents such as bad economic results associated with tariff hikes around the times of the Panic of 1893 and Great Depression may not necessarily play out similarly now. Perhaps they happen, but not in a significant way until several years from now.
Number four and perhaps the most powerful of the caveats, people get their news far differently. In the on-line era, it’s not a hyperbole to claim that alternative truths exist at the same point in time. One never can be sure who authored what one reads or even if a picture or video depict something that really happened. Society is seemingly heading into a time when people will believe not what they see around them but what they are told to believe.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
ShareThisYou can leave a response, or trackback from your own site.
