At a White House press conference last week, Donald Trump brought up one of his favorite talking points as proof that his presidency has been a success.
“The stock market is at an all-time high,” he boasted. “Think of that – over 50 percent since my election. Fifty percent. People – the 401(k)s – and they have 401(k)s, and they were dying with them for years. Now they’re so happy.”
Yesterday, as the major U.S. indexes dropped sharply for the second straight day, the president fielded a reporter’s question on this, and was content to keep bragging.
Q: Mr. President, you have talked a little bit about the markets. The markets are down again, today. How long do you think this correction, which you said was coming anyway, is expected to last?
TRUMP: Well, we’re still up 40 percent for the period of time. So, I mean, the markets are way up over what they were.
Part of the problem is that the president is throwing around bogus numbers that he appears to have simply made up. As CNBC’s John Harwood noted late yesterday, the Dow Jones Industrial Average is up 26% from Trump’s first day in office through yesterday’s close. That’s obviously not close to the gains the president has pointed to, and it’s also short of the 38% increase we saw over a comparable period in Barack Obama’s presidency.
Making matters slightly worse, the bulk of those gains came last year. Looking exclusively at 2018, the DJIA is only up about 1% after factoring in this week’s losses.
And just to twist the knife a bit, it’s worth emphasizing that Trump’s own actions – his trade war with China, his aggressive public criticisms of the Federal Reserve – have likely contributed to the latest market losses.
But the real political problem was the president tying his fortunes to Wall Street in the first place.
As we discussed nearly a year ago, Trump has long seen the markets as a real-time barometer of his record. When Wall Street does well, it meant he’s doing well. When stocks values look good, it meant the value of his presidency looks good.
This was always unwise. Not only are there important differences between the stock market and the economy, but Trump, ignoring warnings, apparently worked from the assumption that the major indexes only move in one direction.
Circling back to our previous coverage, I think it’s important not to respond to market dips in lazy, partisan ways. In the Obama era, Trump and his allies used to respond to even modest drops on Wall Street as proof that the Democratic White House was failing.
The line of argument proved to be ridiculous, not only because the stock market’s performance over the course of Obama’s presidency was very strong, but also because blaming short-term Wall Street trends on the White House is always unwise.
The trouble, however, is that Trump has gone out of his way to take credit for stock market gains. It apparently never occurred to him that would mean taking responsibility when stock values started to decline.
Jay Carney, one of the Obama-era White House press secretaries, noted a while back that it’s a “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.”