All Those Big Stock Market Gains Trump Bragged About? All $11.5 Trillion of Them Are GonePhoto courtesy of Getty Politics Features coronavirus
It was always nonsense to declare that the Trump economy (or the Obama economy, for that matter) was good for all Americans, since the lack of universal healthcare and a livable minimum wage meant that so many were going to be left behind, but Trump could legitimately brag about a robust stock market…i.e., a good economy for the rich and heavily invested. That was the flag he could wave proudly as he ignored valid criticisms.
Now? After another disastrous day for the markets, it’s all gone. From Business Insider:
Thursday’s massive sell-off has erased any remaining stock market gains made since President Trump’s 2016 election win.
US stocks are down more than 8% Thursday afternoon as coronavirus risks build and investors fear near-term recession. The total market cap of the US equities market, as measured by the Russell 3000 index, has declined by $11.5 trillion from its February 19 peak to $23.8 trillion as of Thursday morning.
The current market cap is roughly equal to the size of the stock market when Donald Trump emerged victorious in the 2016 election.
The two biggest contributing factors have been a global oil-price war, and, of course, the coronavirus pandemic. The Trump administration has been totally unprepared to deal with the latter, and as major events have been canceled across the country, Trump continues to cast blame on organizations like the CDC:
For decades the @CDCgov looked at, and studied, its testing system, but did nothing about it. It would always be inadequate and slow for a large scale pandemic, but a pandemic would never happen, they hoped. President Obama made changes that only complicated things further…..
— Donald J. Trump (@realDonaldTrump) March 13, 2020
Steps are being taken to try to resuscitate the market:
The government has since rushed to prop up the economy from growing economic threats. Democrats have urged the White House to declare a state of emergency and unveiled a bill aimed at issuing widespread fiscal relief. The Federal Reserve issued its first emergency rate cut since the financial crisis on March 3, and called for $1.5 trillion in capital market injections Thursday afternoon.
Along with the rate cute, so-called “risk assets” received a boost Thursday with a liquidity injection from the Federal Reserve, as the Times reported:
The Federal Reserve moved to stem a market meltdown on Thursday with offers of $1.5 trillion in short-term loans that some analysts say could point to more aggressive action from the central bank in coming days to stimulate the economy and stabilize the financial system.
The big fear is that a recession could hit, and hit soon. There’s no indication how severe it might be or how long it might last, and the same can be said for the coronavirus itself. Clearly, there’s fear of how deep the bottom might be, and drastic actions are starting to be taken.