Trump Should Give Thanks, Not Take Credit, for Economic Growth
In the year since Donald Trump was elected president, the economy and markets have been on a roll. Stocks have set one record after another, unemployment has dropped sharply and the U.S. enjoyed its strongest six months of economic growth since 2014.
Mr. Trump thinks he knows why: “The reason our stock market is so successful is because of me,” he declared earlier this week.
But Mr. Trump should be giving thanks, not taking credit. The entire global economy is picking up steam, and foreign stocks are outperforming American markets. This suggests the U.S.’s good fortune is due less to Mr. Trump’s presence than to a broader, global trend. Years of highly stimulative monetary policies by central banks have finally overcome various postcrisis headwinds holding back growth.
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By last year Oil recovered, especially after production cuts by OPEC and Russia shortly after Mr. Trump’s election. China reopened the credit taps.
Ethan Harris of Bank of America Merrill Lynch notes in a recent report that monthly business activity indexes in the U.S. and globally bottomed out in February 2016, and have been rising since. He says growth in China, the eurozone and Japan this year has exceeded both economists’ expectations and those countries’ long-term potential growth rates.
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So why is the market up so much? The overall economy “was better than markets realized this time last year,” says Charles Himmelberg, Goldman’s co-chief markets economist. “It was a little bit of a happy coincidence that markets started to fully price the strength of that macro data when Trump got elected.”
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https://www.wsj.com/articles/trump-should-give-thanks-not-take-credit-for-economic-growth-1510158089