In the American system, the U.S. president plays a lot of roles. He’s the commander-in-chief, the leader of the executive branch, the head of state.
But gifted stock-market analyst? Not so fast.
Tuesday’s conviction of former Trump campaign chairman Paul Manafort and guilty plea from former Trump lawyer Michael Cohen raised, once again, the spectre of impeachment. In response, President Trump on Thursday told Fox News: “I don’t know how you can impeach somebody who’s done a great job. If I ever got impeached, I think the market would crash. I think everybody would be very poor, because without this thinking, you would see — you would see numbers that you wouldn’t believe in reverse.”
In a sense, Trump’s prediction that the stock market would crash if the House impeaches him is the flip side of the “I alone can fix it” mentality that he articulated at the 2016 Republican National Convention. In this view, Trump singlehandedly has been repairing our economy for the last year and a half, sending the markets and most major economic indicators soaring. So if we threaten to pull him off the job, we risk economic collapse. Politically, it might make sense for Trump to tie himself to the economy’s success, as presidents in good economic times have done for decades.
But as powerful as the presidency is, the idea that Trump holds a sorcerer’s ability to control economic activity and to determine the direction of the stock market lies somewhere between far-fetched and totally wrong. Not even genuine autocrats in Venezuela and China hold such power.
The economic achievements often attributed to Trump are actually products of collaboration: Congress crafted the tax bill. Executive agencies are doing the hard work of repealing regulations. Impeachment and even removal from office would likely have no effect on either of those policies that are undergirding the stock market’s continued rise, strong economic growth, and lower unemployment.
Of course, those trends won’t continue forever. Economists believe the chance of a recession in the next year is remote, though odds pick up in 2020. The U.S. economy is in its second-longest expansion in history, which will end at some point. If Trump were impeached, it would create uncertainty, which markets tend to abhor. Yet when President Clinton was impeached in 1998, the economy was amid its longest period of growth, and the stock market continued to boom.
Bloomberg News on Thursday summarized the views of stock-market analysts on impeachment like this: “Analysts were mostly skeptical the president is in any real danger and not sure there’d be any major impact should he be.” One analyst wrote: “Markets don’t seem to care, and we think they are right.”
The economy is a fickle animal. Its health depends on millions of individual decisions – whether to buy stocks, buy a house, invest in a business, save money, go shopping. There’s a psychological element, too: If people feel confident about the future, they tend to do things that are positive for the economy. If they are fearful about the future, they don’t. Government policy can help influence those decisions, but it is one factor among many.
Where is it all heading? And when? Nobody really knows. Not even the president of the United States.
