Donald Trump loves to tweet about the stock market. He’s done so at least 17 times since the election. He also loves to tweet about polls showing Americans are optimistic about the economy. But Trump isn’t likely to tweet about this …
Main Street’s confidence in the stock market is crumbling at the fastest pace since at least 1987. …
Just 33% of people polled by the Conference Board this month expected stock prices to rise over the next year.
After hitting a peak in January, the market has dropped more than 2,500 points. The result has been a lot of nervous 401K owners eyeing shrinking retirement funds. Though it’s not as if some people aren’t doing very well.
Big banks just received the first installment of benefits corporate America will reap from the new federal tax law. The haul: more than $2.5 billion.
With Consumer Financial Protection Bureau director Mick Mulvaney telling them they don’t have to worry about things like discrimination or regulation, so long as they pony up a little vigorish, bankers can keep walking on the sunny side of the street. But for everyone else the economy seems to be shifting into lower gear. Despite Trump’s ecstatic predictions of rocket-like growth if we only passed a tax cut giving 83 percent of benefits to 1 percent of Americans, things haven’t been quite as rosy as promised.
“There has been a general downward drift and the quarter is looking a little softer than expected,” said Ethan Harris, head of global economics research at Bank of America Merrill Lynch in New York. “The effects of the tax cuts build very slowly as the year unfolds. We need more time for the fiscal stimulus to show up.”
Wall Street is sure this slowdown is temporary. After all, Americans are seeing “fatter paychecks.” so they’re bound to start spending. Any day now. Any day. Especially when they realize that most Americans got less than $20 per paycheck.
And that $20 is looking smaller and smaller as savings shrink and the cost of living increases.
Not only did predictions about the overall economy come in below expectations, but wage growth has also slowed since the tax cut for billionaires was voted in. In the meantime, the rate of inflation for the last six months has increased to the highest in seven years, swallowing the modest gains in salaries and making any of those one-time “tax cut bonuses” seem vanishingly small.
Average Americans have found themselves looking at higher prices, a slowing job market, slowing wage increases, and declining money in their retirement funds. The combination is taking a little bit of spark out of predictions about where we go from here.
The Atlanta Fed’s tracking estimate, which is closely followed on Wall Street, has plunged from 5.4 percent on Feb. 1, a forecast highlighted at the time on Twitter by Trump supporters including Anthony Scaramucci, who briefly served as White House communications director. Kevin Hassett, chairman of Trump’s Council of Economic Advisers, has also praised the accuracy of the bank’s tracker of gross domestic product.
Sorry, Mooch. The latest forecast is a measly 2.0 percent. But how can this be? America’s bankers and Wall Street investors are wallowing in massive cuts. Corporations are practically tripping over money. Why don’t they raise worker pay? Why don’t they hire more people?
Because it doesn’t work that way. It never did. And voters pretty much realize that. Even Trump’s base.
The white working-class voters in the industrial Midwest who helped put Mr. Trump in the White House are now seeing the extra cash from the tax cut, the president’s signature domestic policy achievement and the foundation for Republican election hopes in November.
But the result has hardly been a windfall, economically or politically. Other workers described their increase as enough for a week’s worth of gas or a couple of gallons of milk, with an additional $40 in a paycheck every two weeks on the high side to $2 a week on the low. Few are complaining, but the working class here is not feeling flush with newfound wealth.