As fun as it is to remind the naysayers just how wrong they were about how Trump would impact the economy, things have moved beyond the sweet satisfaction of being right.
Stock markets have improved so much in the past four months that it takes a bit of hyperbole and historical comparison to really put it in context. The economy recovered faster than almost anyone could predict, and it’s primed for great things. Let’s look more closely at the Trump bump and its sheer magnitude.
At the time of this writing, the Dow Jones peaked on March 1 at 21,115. While the first week of March has been slow for the Dow, it is still closing above the February peak, and all indicators suggest that early March will be the worst part of the month for growth.
The president is set to deliver his first budget proposal within a week, and if it adheres to his claims so far, the restructuring will further encourage domestic investment, especially in infrastructure-related industries.
Since Trump took office, the S&P 500 and Dow Jones have had similar runs. Like the Dow, the S&P peaked on the first, and despite the temporary lull, it still remains above February highs. Also akin to the Dow, the S&P saw its fastest growth in the first half of February, and it was the best market gains seen in either index in several years.
The S&P stands to get an even better boost from Trump’s next wave of proposals, and if not for an exceptional first day of the month, it would currently be at an historic high.
The Bull Run
The current bull run started all the way back in 2009. This means markets rose over a long average without having a 20-percent drop from a closing high. Despite the length of that growth, it was still underwhelming in gains. In fact, before Trump was elected, it was the second-longest bull run in history, but it lagged behind several shorter runs in percentage increase.
Since Trump was elected, the change has been notable. Growth has been historically high, and the Trump part of the bull run has almost matched the seven-years of gains prior.
While it still hasn’t eclipsed the 90s run in percentage gains, it is now the most profitable bull run of all time in terms of raw gains. Just since November, stocks have gained $3.2 trillion in new wealth.
Compared to the $18 trillion in wealth gained from 2009 until the election, this is remarkable. In fact, if the Trump pace continues, it will only take one-and-a-half years for Trump’s economy to eclipse Obama’s entire eight years in office.
The assumption that things will continue as they have is dangerous and extremely unlikely. While those invested in Trump’s failure will continue to predict gloom, real economists are noting that we are likely seeing the slow part of growth so far.
A historical analysis shows interesting results that post Dow and S&P gains in January and February. With only one exception, every time it has happened before (27 times so far), markets showed year-end growth. That might not sound impressive, but year-end changes have averaged 24 percent for the years in question.
So far, the Dow and S&P have only seen about a six-percent gain since the election. That means historical evidence suggests a large spike is in store.
The historical indicators are in line with expectations tied to the administration. Deregulation efforts have already begun, and they have freed several billion dollars in a number of industries.
This is only change that Trump can affect through executive orders. When Congress starts passing bills, deregulation and federal spending can change at a sharper rate. Simply allowing domestic corporations to repatriate cash could easily bring a trillion dollars back into the economy.
The full scope of potential is difficult to gauge, but the reverberating message is that businesses of all sizes will be able to thrive, jobs will be created en masse and the economy will surge faster than it has in a long time.
Trump is already making history with economic progress, and he’s barely even begun to work on the largest issues. Now is a very exciting time to be investing, and it’s a great time to be an American.
~ American Liberty Report