The election of Donald Trump as President of the United States, and the decision by the people of the United Kingdom to #Brexit, have more in common than might seem obvious at first blush. In fact, the two events are both major parts of the same series of issues that are felling dominoes all across our planet. However, the one similarity we should really focus in on today is the economic impact of these two events.
In the lead up to the #Brexit vote, many liberal prognosticators worried that if the UK left the European Union (EU) it would play havoc with their economy. However, what actually happened was far different. In the days after the #Brexit vote, the market did at first stumble, but it quickly caught itself and rebounded, leading the UK to have the world’s strongest economy just a few months after the #Brexit vote. The British economy is still humming along, far outpacing the rest of their partners (soon to be ex-partners) in the EU. What’s more, looking back, economists give credit to the #Brexit vote as the spark that ignited the British economic BOOM.
Far from slowing after the referendum in June, as predicted by the Treasury and Bank of England, growth appeared to have improved. GDP grew at 0.3 per cent and 0.6 per cent in the first two quarters of last year, compared with 0.6 per cent and an estimated 0.5 per cent in the final period.
Andrew Haldane, chief economist at the Bank of England, suggested that economic forecasters were facing a “Michael Fish moment” over their mistaken predictions, referring to the BBC weather forecaster. Mr Haldane, comparing the profession’s failure to spot the 2008 recession to Mr Fish’s infamous assurance of “no hurricane” on the eve of the great storm of 1987, said: “It’s a fair cop to say that the profession is to some degree in crisis.”
He also admitted to shortcomings in pre-Brexit predictions, saying that “the data has surprised to the upside”.
The possibility of the election of Donald Trump sparked similar fears among liberals in the United States, who argued of our impending economic (and political) doom if Trump were elected President. Again, in the days immediately following his eventual electoral victory, the market showed signs of slowing as it tried to overcome the shock of Hillary Clinton’s loss. However, just like in the UK, the American market swiftly gained its balance and began a meteoric assent to record heights! In the months since President Trump’s election the economy and the markets have only grown stronger and more vital, defying the liberal soothsayers who were so negative about our economic prospects under President Trump.
The Dow Jones Industrial Average scored its sixth straight record high on Thursday…
It was a mixed day on wall Street as investors digested recent gains and sold banks that have been big winners in the “Trump rally” that has seen the S&P 500 rise about 5 percent so far in 2017, with the Dow Jones Industrial Average up 4 percent.
Signs of an improving economy and promises by President Donald Trump to cut corporate taxes and reduce financial regulations have been behind much of the recent gains. Now, with a strong fourth-quarter earnings season mostly complete, many investors say they need concrete signs of progress from Trump to justify more gains.
“Some of the excitement and enthusiasm over earnings and those Trump growth initiatives is starting to shift to more practical, day-to-day events,” said Jeff Kravetz, a Phoenix-based regional investment director of the Private Client Reserve at U.S. Bank.
Even the liberals at Reuters are forced to call our economic good fortune “the Trump rally” because they understand (just as those investing in the British markets understood) that investing your money in the USA and the UK right now is a win-win proposition. Why? Because both nations are offering the safety and freedom provided by conservative economic policy to their investors. The success of the markets in both nations is definitive evidence that conservative economic policy is ALWAYS a positive force on the national and world economy.