Forget Robert Mueller. The greatest threat to President Donald Trump’s re-election bid may not be the slew of investigations closing in on his Oval Office but a possible economic slowdown. And the president knows it.
The Dow Jones Industrial Average fell again Monday, the latest dip in the roller coaster markets amid the strain of Trump’s trade war, rising interest rates and worries about a slowing global economy.
Trump, who has tied his political fortunes to the stock market in an unprecedented fashion, has nervously watched Wall Street, keeping an eye on the cable television ticker and barking at his aides for updates. And while he continues to talk up America’s financial might, he has repeatedly and publicly rebuked the chairman of the Federal Reserve for interest rate increases he feels could slow down the economy.
Trump made his feelings clear again Monday, tweeting that “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”
Throughout Trump’s term, the economy has been strong. And while the president credits his aggressive tax-cut package and deregulation efforts, the gains in fact began under President Barack Obama.
Optimism about the economy has cooled somewhat this fall as Trump’s trade fight with China rattled the markets.
Fond of citing job statistics and market reports, Trump has appeared highly attuned to the shift. After unnerving much of the global financial system by imposing tariffs, Trump seemed eager to ease anxiety recently, striking a trade truce with China after a dinner meeting during an international summit in Argentina. And when that move only briefly buoyed confidence, Trump set off on an erratic bout of tweeting that rocked the markets even more.
First Trump declared himself a “Tariff Man,” promising to inflict as much economic pain as possible — a move that horrified investors. A day later he sought to minimize the anxieties, saying there were “very strong signals” that China was negotiating in good faith.
“Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting,” Trump tweeted.
Stocks fell again Monday as both the Dow and the S&P 500 are on pace for their worst December performance since 1931, when they were battered during the Great Depression. As investors turned to an upcoming meeting of the Federal Reserve, its chairman, Jerome Powell, has repeatedly been the target of Trump’s wrath, as the Fed has been raising interest rates to make sure that the lowest unemployment in nearly five decades does not start pushing inflation higher. Arguing that the rate hikes hamper economic growth, Trump has openly questioned Powell’s leadership.
“I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy,” the president said in October.
No longer tweeting much about the stock market, Trump has criticized Powell privately as well and has told confidants that he understands that a recession would be perilous for a president who once mused about the Dow hitting 30,000. (Its record was 26,828 in October.) Although Trump is not seriously considering making a change at the Fed, he has repeatedly insisted that his businessman background allows him to understand the economy more than Powell, according to four White House aides and outside advisers who were not authorized to discuss private conversations and who spoke on condition of anonymity.
“He thinks his legacy is going to be the guy who rebuilt and revived the US economy. He’s totally focused on that,” said Stephen Moore, a former Trump campaign adviser and visiting fellow at the Heritage Foundation. “He understands that if the economy remains strong, he’ll be re-elected. He’s completely focused on the economy. He does follow the stock market, he does follow the stock reports, he does follow the jobs report.”
Published in Daily Times, December 19th 2018.