DOW/ECONOMY/TRUMP AS PRESIDENT: “President Donald Trump is proud of the U.S. stock market. He made that clear in tweets on Saturday, Monday and Tuesday. On Wednesday [8-2-17], as the Dow Jones Industrial Average surpassed 22,000 for the first time, he announced his support for legislation to cut legal immigration—and then quickly changed topics to crow about the market. ‘We’ve picked up, substantially now, more than $4 trillion in net worth in terms of our country, our stocks, our companies,’ he declared enthusiastically.
Trump is right that the stock market is on a tear, up 22 percent since Election Day. But the stock market is not the economy, and the truth is that the economy hasn’t much changed since Trump took office. Growth remains at about 2 percent, wages are still barely rising and job gains, if anything, have slowed.
The Dow, of course, isn’t unrelated to the economy. The index of 30 large publicly traded companiesis a popular proxy for the health of America’s largest businesses. If the Dow were crashing, it would be a real sign of trouble. But economists have frequently found little relationship between returns on stock investments and real economic growth. For example, a major 2002 study, from three economists, looked at equity returns and per capita gross domestic product growth for 16 nations from 1900 to 2000 and found little evidence that stronger equity returns correlated with stronger long-run economic growth.”
-Danny Vinik, “Trump is fooling himself with the Dow,” Politico, Aug. 2, 2017 04:19pm