…explained by Anthony Piel:
President Donald Trump spent yesterday at Mar-a-Lago tweeting and claiming credit for the Dow Jones reaching nearly 29,000, an all-time record. Trump has put out over 100 Tweets making this claim, and saying it will be the central issue in his campaign for re-election in 2020. Trump’s base is delirious !
The question is, do stock market price trends actually measure trends in the real economy, or something else ? The answer is, something else. So, what do the stock market prices actually reflect ? The answer : The continuing rise in stock markets results mainly from the continuing increase in disparity of wealth and income in the US. The typical already-wealthy few, who own and earn more that the bottom half of all Americans, have limited ways of investing their new wealth in economic development initiatives, so month after month and year after year, they routinely put part of their new-found (often untaxed) wealth in the stock and bond markets. It is this, and not economic growth, that accounts for the continuing rise in the markets.
In practice, US Presidents have very little influence over true economic growth. They like to claim credit for the good times, and blame others for the bad. The few times Trump has put his thumb in the pie (e.g. Trade War with China, closure of GM auto plants) have turned out to be disasters for American farmers and workers. Trump is under-equipped to deal with these issues, and he consults no one who knows better, but he talks a “great” game to his base.
From Trump’s viewpoint, the “official” indicators look good. The core Consumer Price Index looks reasonable, but it excludes food and fuel ( huh ?). It grossly understates the real decline in the purchasing power of the US dollar (over 5.5% a year). The official Unemployment Rate looks like a record low of 3.5%. The truth is it is closer to 10%. But the “official” rate excludes would-be workers who have become too discouraged to register as unemployed. Contrary to “official” assurances, families are not in fact surveyed to find out who is employed or unemployed, who is adequately paid or not, or who can afford health & medical care or not. The homeless are certainly not being surveyed or asked any of these questions. The Trump/GOP has no desire to find out.
If Democrats and other rational, reasonable, informed Americans could re-capture the Senate and the Oval office in 2020, we’d have a chance to discuss and find more accurate ways to measure the economy, and we could explore those policies and programs that would reach the intended results.