Wednesday, December 19, 2018

What Trump has yet to learn about the economy - 'if you claim the rise, you own the fall'

Sometimes it’s better not to be a data junkie. The last month has been one of those times. Here’s a link to the Dow Jones index that lets you view it over different time scales. You’ll see what I mean.

Steve Benen (MSNBC/MaddowBlog) has some reminders for us - and for the Trumpites - in his post on why The stock market is no longer Donald Trump’s favorite metric.

It was just two months ago when Donald Trump pointed to Wall Street as proof of how successful his presidency has been. “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.”

A lot can change in a couple of months.

Two benchmark U.S. stock indexes are careening toward a historically bad December.

Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 are down 7.8 percent and 7.6 percent this month, respectively.

Wall Street’s major indexes are in negative territory for the year. The S&P 500 is up about 12% since Trump took office, not 50%.

Catherine Rampell (Washington Post) tweeted an interesting comparison. Trump hates all things Obama, apparently with good reason: stocks performed way better under Obama than under Trump

Benen closes with this observation on why we should learn from history and not succumb to hysteria.

… it’s important not to respond to market dips in lazy and/or 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 foolish.

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.”

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