The political world may be in turmoil but the stock market has been hitting records, while small business optimism and even consumer confidence have attained highs not seen in more than a decade. What’s going on?
For starters, the stock market is up 9% since Donald Trump’s election, including 4% since the beginning of 2017 alone. That’s not too hard to explain; President Trump has promised to substantially lower corporate taxes and free companies from overly stringent regulations. That has led to huge rallies, for example, in financial stocks, which stand to benefit both from relaxing the Dodd-Frank legislation as well as from higher interest rates likely to result from the expectation that the new administration will increase the deficit, which in turn will make interest rates increase.
That pro-business sentiment has spilled over to small business owners; optimism among this group has shot up since the election and is now the highest since December 2004.
Consumer confidence has also risen and in January, reached the highest level since the beginning of 2004. But this index is tracked more frequently than small business optimism and while it’s only a preliminary reading for one month (February), it is worth noting that in this most recent period – when there has been so much chaos in Washington — it dipped (although not back to pre-election lows.)
Note: for the related Morning Joe video, click here.