One hundred and two days ago, we all marveled at Donald Trump’s presidency — the determination, or toxicity if you didn’t like it, of his inaugural address; the smell of the 3 million-plus protesters who hit the streets the next day worldwide; the greasepaint-like roar of Trump and spokesman Sean Spicer insisting pictures of his scanty inauguration crowd were a conspiracy.
The news of April 28, that first-quarter economic growth crawled at an annual rate of only 0.7%, the slowest in three years, put the lie to both sides, really. The next day, President Trump rallied his base in Pennsylvania.
It showed there certainly is no animal-spirits-driven surge of optimism and investment. It also showed that the president, who hasn’t gotten a blessed thing that matters through a Congress run by his own party, may be less threatening than supposed, at least to the economy and financial markets. Call him Donald “Dud” Trump.
Read: This scoreboard tracks the economy under Trump
America, love it or leave it, has the economy it has. It’s growing about 2% to 2.5% a year, Trump or no Trump. Get used to it, and make your investment decisions accordingly.
“Households and business leaders have been telling surveyors that they are feeling so much better about things since the election,” Joel Naroff of Naroff Economic Advisors said April 28. “That may be the case, but they didn’t go out and put their money where their mouths were.”
One reason this is still true is that Trump hasn’t gotten anything done — that’s the conventional “First 100 Days Review” part of this column. Trump’s puffed-up executive orders aside, the meat of the matter is legislation, specifically on health care and fiscal policy, and here the president is clueless.
The repeal of Obamacare is like Francisco Franco in “Saturday Night Live’s” 1975 telling — quite dead, but still hanging on in the comic imagination. Cowed by public rejection in March of a proposal the Congressional Budget Office said would cost 24 million people their health coverage, the GOP caucus and Trump negotiated a bill that would gut insurance even more, essentially leaving anybody who’s ever been old or sick to the wolves. Maybe that improves the original bill’s 17% public-approval rating, but unlikely. Late last week, House Republicans postponed a vote on the new bill.
Last week’s unveiling of the administration’s first cut at tax legislation was a dumber, sadder joke. Pressed by an offhand Trump promise to produce a plan before the 100-day mark, a Treasury Department lacking, among other things, an assistant secretary for tax policy came up with 229 words of bullet points. Treasury Secretary Steve Mnuchin claimed 100 people had worked exhaustively on the document, a testament to the Death of American Productivity in all fields but unintentional comedy.
What was clear enough amid the missing details was that the plan, once written and passed, would probably boost the national debt by $2 trillion over 10 years, according to conservatives, while barely boosting growth and redistributing wealth to already-rich people. Which was the same result the health-care bill would have, give or take zeroes. It probably won’t pass, for the same reason health care didn’t: Swing-state House Republicans want no part of explaining next year why you lost health insurance (or your deduction for state and local taxes) to cut Mnuchin’s taxes.
So where does that leave a small investor?
Exactly where they were Nov. 7.
The right way to think about the GDP number, and the 100 Days, is that they leave us in the same place: an economy growing 2% to 2.5%, biased toward the higher number.
It’s simple: 2016 growth was 1.6%, and the two years before that averaged 2.5%. Last year was held down by slower oil drilling and lower exports early in the year as China wobbled, both correcting now. Seeing those revert toward the mean makes the economy do the same, leavened by a slightly concerning slowdown in consumer-spending growth and vehicle sales. Plus, Trump keeps making noises about trade wars, most recently threatening to reopen a trade deal with our ally South Korea even as a diplomatic showdown with North Korea over nuclear weapons drags on.
The slow first quarter isn’t really worrisome, since real wages are still rising slowly near all-time peaks reached last decade, and consumer balance sheets are in good shape, economist Bernard Baumohl said. Consumer fundamentals feed the widespread belief that growth in the middle of the year will bounce back, especially because the government has underestimated first-quarter data for several years running, he added.
But if you’re betting on more than that, be careful.
Institutional Wall Street’s post-election book on Trump has been: He can goose growth about half a point with tax cuts and infrastructure spending if he avoids doing even more harm by starting a trade war. The 100 Days suggest the president is too politically unskilled, and has too little attention span, to accomplish either.
It could be worse: 2.5% growth has brought us to the cusp of record inflation-adjusted median incomes and full employment, though it has taken nine years since the financial crisis. It has also fueled a huge bull market, probably overvalued now, and let the Federal Reserve begin raising interest rates, which Naroff says it will likely do again by July.
But since Trump has accomplished nothing of note, nothing’s coming down the road to change the picture.
Tim Mullaney covers politics and economics for MarketWatch.