There’s a reason most presidents are cautious when talking about the stock market. President Trump is learning it the hard way this week.
He is, in effect, experiencing the downside of having spent the past three years personalizing much of what happens in the markets and the economy, saying that the soaring stock values under his watch are a reflection of his special ability, and a central part of his case for reelection in November.
Most presidents avoid boasting about a rising stock market because they know how fragile it is, and how little control over stock prices they really have, and how stock prices can move sharply for reasons outside their control, or sometimes for no clear reason at all.
The cost of claiming personal credit for stock market gains comes when you get stock market losses. And that is particularly relevant after a 7 percent drop in the S&P 500 since its peak last week, seemingly caused by a recognition on Wall Street that the spread of coronavirus could disrupt the world economy.
The outbreak of the new type of coronavirus in China and its spread to other nations was not something that Trump could have prevented. But even as public health officials start to warn that many Americans may become infected, the Trump administration has devoted lots of effort to talking up the stock market.
“Stock Market starting to look very good to me!” the president tweeted shortly after the stock market closed Monday afternoon after a 3.5 percent drop.
It went on to drop an additional 3 percent on Tuesday.
Wednesday morning, Trump seemingly blamed the stock market sell-off on alarmist coverage by cable news networks and said the country is in great shape.
“Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible,” he posted on Twitter. “Likewise their incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape!”
If the sell-off continues, it could undermine a key pillar of the president’s reelection pitch.
That might be less of an issue if Trump had not so frequently spoken of the stock market as a real-time barometer of his presidency’s success.
But there’s more at stake than public relations. There’s also the risk that the administration’s focus on the optics of the market distracts them from the bigger task at hand — trying to protect against the potential spread of disease and loss of life that would accompany a global pandemic.
Ideally, even economic officials who don’t have expertise in disease transmission would spend their time trying to understand what industries are likely to be heavily affected and whether government can do anything to help them work through the supply chain disruptions and other bad effects of the virus.