Markets took a hit after President Trump issued conflicting statements on pursing additional pandemic relief.
“He didn’t do anything to the economy, but he whipsawed the markets,” said John Dearie, president of the Center for American Entrepreneurship, a nonpartisan research, policy, and advocacy organization for startups.
The Dow Jones Industrial Average dropped roughly 378 points after the president on Tuesday tweeted that talks should end on providing additional relief to people and businesses hurt by the pandemic. The S&P 500 and Nasdaq also dropped on the news.
Later on Tuesday, Trump reversed his position in a tweet, saying that he would support relief for the airlines and small businesses.
The markets responded positively to the tweets, and all three indexes closed up on Wednesday.
Still, the tweets might have damaged how Republicans approach those talks.
Alex Brill, a resident fellow at the right-leaning think tank AEI, said Republicans are probably scratching their heads trying to follow Trump’s lead.
“I think it creates confusion for the negotiators. Republicans on the Hill are looking for a signal from the president. They are looking for leadership on this, and he’s oscillating,” Brill said.
Doug Holtz-Eakin, president of the center-right economic think tank American Action Forum and a former director of the nonpartisan Congressional Budget Office, wondered if Trump’s reversal was a way to advance his objectives.
“Is this policy, or is this tactics with [House Speaker] Nancy Pelosi? You can never tell,” he said.
Pelosi and Treasury Secretary Steven Mnuchin are the lead negotiators in the relief talks.
Talks between the two halted momentary after Trump’s initial tweet that called off the negotiation. Those talks continued after the president switched positions.
In the renewed talks, Mnuchin on Wednesday sought relief for the airlines. Pelosi responded that House Democrats attempted to pass such relief last week. House Republicans thwarted that effort.
Maya MacGuineas, president of the bipartisan think tank Committee for a Responsible Federal Budget, said the latest developments by party leaders was “soul crushing” as partisanship seems to dominate talks on providing aid to people in dire need.
“It’s discouraging and disruptive; neither of which is good for anybody or any part of the economy,” she said, adding that the latest rounds of talks have only added uncertainty to the process.
“Certainty is the cheapest form of stimulus there is. Right now, this is a world where we have none of that,” she said.
