Trump's Stock Market and Un-Shared American Prosperity
The stock market is up, but what does that have to do with national well-being when the economy is so unequal and democracy so corrupt?
The right-wing spin machine lately has been making much of the “booming” stock market. Stuart Varney, a long-time Fox News and Fox Business bombasticator, declared recently that there has been a $5 trillion increase in “the nation’s wealth” since Trump’s election. Varney's audience—the idiotic hosts of “Fox and Friends”—were left agape and aghast.
“Why isn’t the media covering this?!” co-host Steve Doocy wondered.
On Saturday morning, Trump tweeted: “…Highest stock Market ever, up $5.4 trill.”
So what? This “huge number” (Varney’s words)—$5 trillion!!—is clearly meant to suggest a stunning (and scandalously under-reported) increase in “our” prosperity and economic well-being. But this conclusion simply does not follow from this datum. This commentary is deceptive and disingenuous, and its implications are not true. It’s fake news, to coin a phrase.
Stock prices have risen since Trump’s election. (The Dow Jones Industrial Average (DJIA) currently sits at 23,539, an all-time high.) And this increase does indeed suggest a sizable increase in the market value of publicly traded shares—in the trillions, for sure.
It is worth noting, first of all, that this increase in stock prices has in fact been reported widely—although generally not with the hyperbolic mendacity shown by Trump, Varney and their “Fox and Friends.”
Everything else being equal, a rising stock market can be seen as a notable and good development. But the stock market does not—by a long shot—measure “the nation’s wealth,” our standard of living, or our "national well-being." It provides a (dubious) measure of the value corporate assets; it reflects, most essentially, current corporate profits (which continue to soar!) and expected future profits.
A rising stock market benefits stock holders. Those of us lucky enough to own some stock (or lucky enough to have a retirement account, or work for an institution with a sizable endowment) benefit, to some degree, from a rising stock market. But the vast majority of stock is owned by the very wealthy. The richest 1% own 43% of financial wealth in the USA. The top 20% own 95% of financial wealth. The bottom 80% own just 5%. This “huge number”—$5 trillion!!—says little more than this: “the stock market has been rising and thus the rich are getting richer.” That’s worth noting, for sure. But it does not mean that “we” are getting richer.
It’s as if, after Hurricane Harvey, Varney or Trump had pointed to a mansion on high ground, owned by someone who’d just signed a big clean-up contract with FEMA, and ask: What’s the problem? That beautiful home is as stunning as ever! Its owner is earning more than ever! Why all the doom and gloom?
(An aside: it is common for conservatives to declare that “most Americans” own stock—suggesting that a stock market boom is good for “most” of us. About 55% of Americans own at least one share of stock, but most of these folks own very little. And, of course, 45% own none at all.)
What’s more, Varney, Trump et al. are careful to cite the growth in the stock market since Trump’s election. Since Trump’s election, the DJIA has risen about 30%. Since his inauguration, it’s grown about 18%. That is, much of the growth cited by Trump, Varney, and the right wing fog machine happened while Barack Obama was in office.
During the Obama Presidency, the DJIA grew 154%. Under George W. Bush, it fell by about 40%. Since Trump’s inauguration, it’s grown by 18%.
We report. You decide.
As noted above, the stock market is not a measure of “economic well-being.” It is, further, ridiculous to assume that the performance of the stock market is an indicator of the wisdom of a president’s policies. Stock markets boom and bust for many reasons (including economic policies). But, this – the performance of the stock market -- is the indicator that Trump's apologists have chosen. By their measure, President Obama's policies were a smashing success. The stock market soared! And yet—or course—Varney and the entire cast at Fox News never said a good word about the Obama economy. They cherry picked data (and made some up) to “show” that Obama-style socialism was a failure. Fake news.
The stock market reflects corporate profits. It says nothing about wages, the cost of (and access to) health care, the quality of our schools, tuition at community colleges and state universities, rising student debt, racial inequality, the wealth of middle class and poor families, the quality and sustainability of our infrastructure, the quality of the air we breathe and the water we drink, or the profound consequences of climate change. These are the things that determine the “well-being” of Americans.
And so, the “huge number” cited by Trump and his apologists is deceptive, of limited importance to 99% of Americans, of virtually no importance to about half of us, and not especially impressive when compared to its performance under President Obama.
Those on the left and the right have differences—many of them legitimate and worthy of debate. These debates (and our policy choices) are corrupted by the manipulative misuse of data – and fake outrage.
It is, by the way, quite likely that the stock prices will continue to rise in the days and weeks ahead, as corporate America anticipates a big fat tax cut.
During his visit with “Fox and Friends,” Stuart Varney suggested that the Trump tax cuts will increase annual economic growth to about 4%. Again, fake news. There is no historical evidence that tax cuts for the rich (a more-or-less comprehensive summary of Trump’s tax plan) will promote growth. Indeed, it is virtually impossible to find a reputable economist who supports this plan. Its defenders include a parade of opportunists and ideological hacks, many of them employed by Fox News and/or backed by Koch-funded think tanks. Other defenders include Trump, his economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin (each a billionaire), a few Wall Street economists, and—oh yeah!—the entire Republican Party, dutifully and mendaciously advancing the interests of its billionaire/corporate patrons. And, not only won’t these tax cuts encourage growth, they will allow the GOP to declare, down the road, that “we can’t afford” health care for all, social security, school funding, environmental protection, etc., etc.