Throughout the Obama presidency, we oddly heard of the strength of Wall Street under the progressive chief executive. So strong was the general bias in favor of Mr. Obama that one had to look among conservative journals to find the observation that the trends of investors appeared to have become inverse to the trends of employment and the general economy. If the economy improved and people were working, then the Fed might change its targeted interests rates, which would put pressure on investments. Oh, no!
With that recent experience, I’ve been hesitant to join my ideological peers in proclaiming the Wall Street boom as a sign of economic health under President Trump. In fact, I’d leave open the possibility that this recent downturn of the market as the actual evidence of economic health. In this regard, I’ve kept in mind the opening paragraph of a Wall Street Journal article from two Fridays ago:
Just weeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms, with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment.
So, companies are investing in themselves. Employees are getting bonus checks. Corporations are repatriating money that has been trapped overseas because of tax inequities. This leads to economic activity, will lead to a broad spreading of the wealth around (to borrow a phrase), and produce some inflation, as demand increases based on increased wealth and as the staples in people’s budgets rise in price to match consumers’ willingness to pay.
We’ll have to wait and see where this all goes, but my suggestion is that nobody panic, because we appear to be heading in a healthier direction more broadly. And again, as a general consideration, we want to see the investment markets growing, of course, but we want it to be because the things in which people are investing are more valuable, not because investing, as an economic activity, is more profitable than other options that might go farther to supplying families with income and improving our lives.