Experts Talk Trump, Economy, and the Stock Market

On March 2, President Trump tweeted: “Since November 8th, Election Day, the Stock Market has posted $3.2 trillion in GAINS and consumer confidence is at a 15 year high. Jobs!”

He wasn’t wrong. On March 1, the Dow Jones Industrial Average surpassed 21,000 (DJIA), which is a record for the number of major stocks traded on the New York Stock Exchange. As of Feb. 28, the Consumer Confidence Index increased to 133.4, a number that is indeed the highest it’s been since July 2001.

In fact, the only signs of economic trouble since Trump was elected came as recently as Tuesday, March 21. The DJIA only declined by 0.2 percent, a change attributed to the delay of the vote on the Affordable Care Act replacement.

With controversy surrounding the Trump Administration, like the suspected involvement of President Trump — and members of his cabinet — with Russia, and the current uneasiness surrounding the replacement of the Affordable Care Act, one would expect the economy to reflect the turbulence of the U.S. government. However, according to financial advisor Don Barrett, the state of the economy is most likely just a “Trump bump”.

“I think [the bump] will be over in the next two years,” Barrett said. “I wouldn’t want to be him, sitting in the oval office.”

Barrett notes that the Obama administration’s $7.917 trillion dollars in debt will, at some point, send the stock market into a frenzy.

“The stock market is going through a lot. It’s always been a good investment, but I think Trump has his challenges lined up for him,” Barrett said.

According to Barrett, in order for Trump to see the economy well, he needs to follow through with his promises to cut taxes on big businesses in order to raise incentive to stay in the U.S., while simultaneously fixing Obamacare so the effects aren’t as devastating to the national debt.

“You have millions of millions of people on Obamacare, and they’re not paying for it,” Barrett said. “Let’s face it… insurance companies are backing out left and right because it won’t survive. And if that happens, it could be the start social unrest in this country.”

Lindsay Baran is an assistant professor of finance at Kent State with a Ph.D in finance from the University of North Carolina. With expertise in corporate finance and stock indexes, Baran pays close attention to the movement of the stock market.

“One of the things that drives stock prices is uncertainty,” she said. “The more uncertainty there is, the lower prices tend to to be.”

That gray area — ironically — has generated consumer investments. Baran explained that she and looks at the “euphoria” that surrounds citizen investors cautiously.

“Consumer confidence is up because unemployment has been steadily going down, but as people see other signs that are positive, like a stock market rally, that might additionally further increase consumer confidence, which again adds to the potential for future growth,” she said.

Baran explained that with Republicans controlling the executive, legislative and judicial branches, the confidence in the majority’s ability to pass President Trump’s proposed policies could also be a reason for a rising economy. However, it’s nearly impossible to have a market that consistently improves without fault.

“I wouldn’t expect (the economy) to keep going up for the next four or eight years, or whatever, but at some point there’s a cycle so we’re gonna see a downturn. And whether it’s because of Trump, because of those economic policies or because of the lack of ability to implement those economic policies, I think there’s a cyclical nature regardless of who’s in office,” she said.

Baran said in order to remain financially secure through an inevitable stock market drop, those who are confident enough to invest should do so cautiously, but consistently.

“I would say that if you’re buying now, keep buying as the crash goes on,” she said. “Because then, you’re sort of buying high and buying low and it evens itself out over time… that seems to be the most prudent strategy if you want to get into the stock market now, have a plan to get in a stay in even when things go down.”

Baran and Barrett agree that uncertainty for the next four years is the only true determinant. With over $19 trillion dollars in debt, the state of the economy is an unclear endeavor – but the strength of an economy lies in its investors.