Trump puts spotlight on progress in economy
Vows bright future to small businesses
Beyond the White House staff turmoil, beyond the Russia investigations and the media wars, President Trump still has the economy on his side. For now. The stock market topped 22,000 Wednesday, setting another all-time record high. Corporate earnings for the second quarter are beating forecasts at the highest rate in at least nine years.
The unemployment rate is 4.4 percent, near historic lows. Wages are rising. Second-quarter growth improved to a solid 2.6 percent, and Mr. Trump confidently predicts it will soon reach his stated goal of 3 percent growth or more annually.
“Dow 30,000 is going to happen,” Wharton School finance professor Jeremy Siegel told the Bloomberg business news service.
Mr. Trump, frustrated by a lack of progress in Congress on his agenda and the media’s focus on scandal instead of the surging jobs and investment picture, is only too happy to take credit for the good economic news.
“We’re setting economic records, and we’re very proud of it,” the president told small-business owners at the White House on Tuesday. “We’re unleashing a new era of American prosperity, perhaps like we’ve never seen before. I think the media’s actually going to be forced to cover it pretty soon.”
Among those in the audience was Al Rodriguez, who owns 14 Sport Clips barbershop franchises in the Pittsburgh region.
“They’re saying the right things with respect to health care reform, tax reform and regulations,” Mr. Rodriguez said in an interview. “Tax reform is critical because of the uncertainty of what I’m going to pay every year.”
Mr. Trump also hinted at more good economic news, saying the government will release “earth-shattering” numbers next week on domestic energy production.
Economists are divided over how much impact Mr. Trump and his policies have had on the economy in just six months. Voters are divided, too.
A Bloomberg poll two weeks ago found that 46 percent of respondents approved of Mr. Trump’s handling of the economy, while 44 percent disapproved. It’s one of the few policy areas where the president enjoys a slight edge in his favor.
On job creation, 47 percent in the Bloomberg survey approved of Mr. Trump’s performance, while 40 percent disapproved.
Economists generally credit Mr. Trump for a surge in the stock market that began immediately after his election. His promise to cut the corporate tax rate from 35 percent to 15 percent and his aggressive assault to eliminate Obama-era business regulations have contributed to a climate of business and consumer optimism, economist generally say. The scandals of the day in Washington have had little impact on the economy’s momentum.
The stock market keeps soaring, even as Congress has failed to approve a repeal of Obamacare that was supposed to create more room in the federal budget for deep tax cuts. Even so, some economists say the administration’s actions have had little impact on the overall U.S. economy.
Presidents and the economy
Joel Naroff, president of Naroff Economic Advisers in Holland, Pennsylvania, describes the economy as “the same as it ever was.”
“Basically, the economy has not changed speed much during the first six months of the new administration compared to the first six months of 2016 — or even the previous few years,” Mr. Naroff said. “A new president really can do little to change the trend in the economy right away. While the Trump administration has raised confidence, it hasn’t done much to change the actual operating condition of the economy through things such as tax or spending changes.”
He said gross domestic product has risen slightly and the unemployment rate has fallen compared with the same period last year, while consumer sentiment has fluctuated.
“Job growth during the first half of 2017 was a bit slower than in the first half of last year, as were wage and disposable income gains,” Mr. Naroff said. “The one unambiguous improvement has been in the equity markets, with the indexes well above where they were either before the election or one year ago.”
The Dow Jones industrial average was 18,332 on Election Day in November and set another record close last Tuesday at 21,963.92 — an increase of 19.8 percent. Wall Street investors speak of the “Trump trade” — a bullish investment strategy based on faith in the businessman-president’s ability to boost the overall economy.
But many economists caution that the optimism fueling growth will fade quickly if Congress doesn’t approve tax cuts as Mr. Trump has promised. Administration officials are saying they expect lawmakers to complete a tax package before the end of the year, although Senate Majority Leader Mitch McConnell, Kentucky Republican, expressed doubt about the prospects for bipartisan tax reform because Democrats won’t cooperate.
“Most of the principles that would get the country growing again, they’re not interested in addressing,” Mr. McConnell told reporters.
Mr. Rodriguez said the promise of tax reform has been perhaps the key to business owners’ optimism.
“Execution is key,” he said. “I certainly appreciate what they’re up against with respect to health care. But the challenge is getting things done. I’m hopeful they can execute and get things done.”
The president tried to reassure smallbusiness owners that the administration is “pursuing bold tax cuts so that our companies can thrive, compete and grow.”
“My administration will be there with you every single step of the way,” Mr. Trump said.
While the surge in markets and job growth receive ample coverage in the business media, Mr. Trump criticizes the mainstream press for largely ignoring the good news.
In the East Room event with smallbusiness leaders, the president even teased his new chief of staff, John F. Kelly, for not getting the press to give more positive coverage of the economy during his first day on the job.
“They don’t talk about it,” Mr. Trump said of the media. “I keep telling Gen. Kelly, ‘General, come on, let’s go, you’re chief of staff. They don’t talk about the all-timehigh stock market.’”
Mr. Naroff said it takes as much as a year to ascertain the effects of a president’s policies on the economy, and he chalks up the current economic performance to a recovery that began during President Obama’s first term.
“Given the rate of growth during the first half of this year, it is clear that we are still expanding, adding jobs and improving wages at the same pace we have seen since the end of the Great Recession,” he said. “In other words, nothing has changed.”
Mr. Trump predicted that the economy will soon hit the self-proclaimed target of 3 percent GDP growth per year.
“Don’t worry about the 3 percent. We’re going to be higher than 3 percent in the not-too-distant future,” he said. “The jobs are coming, pouring back. Factories are coming, pouring back into our country. Jobs are coming back.”
President Trump, flanked by Small Business Administration Administrator Linda McMahon and daughter Ivanka Trump, spoke about the economy with small-business owners.