The stock market started off the year showing a continuing growth cycle consistent with that of the past few years. However starting in February and following that up in March and April, it has lost more than it gained in January and is in a negative gain for the first time in a number of years. The reason for this, an individual who up to then was taking credit for the growth in the stock market meaning of course Donald Trump.
The stock market has been growing since prior to Obama's second term and continued this growth under Trump. It had shown signs of slowing in late 2017 however the tax reform package, which gave significant benefits to big business, gave it a boost which caused it to start the year continuing it's record growth. However Trump has done several things that have caused it to lose all of the gains made this year plus some. First of all is his insistence on starting a trade war with the rest of the world, one the US economically cannot win. Despite his claims, and those of his supporters who seem to believe everything he states, the last time the US undertook a similar action the economy shed 200,000 jobs. Even conservative estimates, using only the tariffs relating to aluminum and steel, would cause a job loss of around 18,000 jobs after allowing for an estimated job growth in the steel industry of 2,000 jobs. So for every job gained, 10 would be lost in other industries. This was followed up by threats relating to both Canada (the US's largest trading partner) and Mexico (who despite Trump's claims, are a major customer for US goods) then the tariffs places on goods from China and the respective retaliation undertaken and expected from them.
Trump then started on US Companies such as Amazon which caused their stock to fall and brought down others in related industries. The mis-information stated by Trump has served to hurt the stock market in these sectors and since many businesses and industries are interrelated bringing down one has a similar effect on others. Further, Trumps bragging that he has intentionally lied to leaders of other countries about trade has further reduced the US's market influence in foreign countries reducing the possible market for US goods and services. He is basically forcing countries who normally do business with the US to look elsewhere for customers and suppliers with the net result of a loss in business to the US and an increased cost of goods for products produced in the US. This increase is expected to more than account for any savings people received as a result of the tax bill which will have the effect of further reducing demand for US made goods and services and the corresponding cuts in production that can be logically expected.
The stock market was set for a correction as it has rarely seen the continual increases it has for almost the past decade without one however the correction was higher than could have been reasonably expected based on the current economic situation both in the US and the rest of the world. The majority of the correction is due solely to the US President.
· 11 months ago