President Trump has kept quiet about the volatility on Wall Street after spending the preceding year claiming credit — loudly and often — for record market gains.
The Dow Jones Industrial Average climbed again on Tuesday, jumping 567 points after beginning the session down nearly an equal amount, a swing of more than 1,000 points. But Trump’s silence after two days of losses totaling 1,841 points, including Monday’s historic tumble of 1,175 points, exposed the political perils of tying his leadership too closely to the market.
“It’s a mistake to be too aggressive in touting a rising stock market because there will inevitably be corrections,” said Michael Steel, a Republican communications operative and former congressional leadership aide.
The Dow closed at 19,287.25 on the day Trump was inaugurated last year. On Tuesday, trading finished at 24,912.77, roughly 23 percent higher, even after this month’s worrisome fluctuations and fall from an all-time high of 26,616.71.
White House press secretary Sarah Sanders said Trump has no regrets about his excessive cheerleading — or declaring himself responsible for the surge. “There’s nothing that’s taking place over the last couple of days in our economy that’s fundamentally different than it was two weeks ago,” she told reporters during Tuesday’s daily briefing.
Indeed, the fundamentals are what concern Republicans the most as they look ahead to the midterm elections. And they share Trump’s confidence, pleased with economic growth overall and the growth in hiring and wages — especially since the December passage of the federal tax overhaul.
In January, the economy created 200,000 jobs and the unemployment rate stood at 4.1 percent. Wages have increased on average by 20 cents over the past two months and are up 2.9 percent year to year. Among the lingering concerns: The labor force participation rate, the figure measuring how many available workers are active in the economy, clocked in at a low 62.7 percent.
Rep. Steve Stivers, R-Ohio, who worked in finance and capital markets before entering politics, said that the rise and fall of the stock market is less important than why it rises and falls.
Stivers, the chairman of the National Republican Congressional Committee, said that the last few days have revealed investors’ concerns about inflation from accelerated growth and rising wages, resulting in what appears to be an expected correction in the value of the market.
As the House GOP’s top political strategist, charged with protecting the House GOP’s 24-seat majority amid some stiff anti-Trump headwinds, that’s the sort of market action Stivers can live with.
“I don’t think the America worker is focused on where the stock market is exactly,” Stivers told the Washington Examiner.
“What really matters to most Americans is the fundamentals of the economy and the fundamentals of the economy is heating up,” he added. “Ironically, the stock market went down because investors are worried that things will heat up too much and interest rates will go up and a bond yield will be more attractive compared to a stock yield.”
A Google search of “Trump takes credit for stock market” yields nearly 4.4 million results. On Twitter, the president’s preferred social media venue, he has posted about the stock market approximately 60 times since winning the presidency in 2016. According to CNBC, Trump first took credit for Wall Street gains on Twitter in late December of that year.
The bragging has continued. Just last month, Trump just traveled to the Davos World Economic Forum in Switzerland to promote the American economy and the role his administration’s tax and regulatory policies played in fueling both growth and voters’ optimism about the future.
“The stock market has smashed one record after another, gaining $8 trillion in value. That is great news for Americans’ 401(k), retirement, pension, and college savings accounts,” Trump said during his first State of the Union address, a few days before the Dow shed 666 points.
The president has clammed up since. Privately, some Republicans are expressing relief, even though his braggadocio about Wall Street is low on their list of problematic Trump rhetoric.
The markets being unpredictable, Republicans worry that Trump linking the GOP’s economic leadership too directly to the Dow could overshadow other positive indicators, especially as it relates to the $1.4 trillion tax reform law that cleared Congress without a single Democratic vote.
Democrats have been on the defensive after so many corporations announced the tax bill was enabling them to give bonuses, raises, and invest in hiring and equipment. They are using the blip in the market, and Trump’s disappearing act, to turn the tables on the GOP, arguing that the party’s agenda revolves around wealthy investors.
“His silence is deafening,” said Sen. Chris Van Hollen of Maryland, chairman of the Democratic Senatorial Campaign Committee. “No word from him since the big fall. … He’s obviously at a big loss for words, which is unusual for this president.”
There are times when stock market gyrations can rattle voters and impact elections. In the fall of 2008, as Congress was negotiating a legislative package to stabilize the teetering financial system, the Dow plunged as the process appeared to falter, contributing to Americans’ anxiety.
Tom Reynolds, a Republican from New York who was serving in the House as the Great Recession took hold, said the past few days on Wall Street has struck him as completely different than what he experienced then. Today, he said, the economic fundamentals are strong and voters’ optimism about their personal pocketbooks is running high.
Opinions about Trump and his leadership on the economy should not be adversely affected by a market correction. But Reynolds cautioned that the president and Republicans in Congress run the risk of taking the blame for any drop nonetheless — and paying the price at the polls — because of how much Trump has equated his agenda with the performance of the Dow.
“This president has chosen to talk about the stock market as a reflection of his presidency,” Reynolds, a two-time NRCC chairman, said. “It becomes fodder to come after you.”
