The stock market is closing out August on the upswing, surging on encouraging new data that suggests continued health in the US economy and getting back on the steady upward course it has enjoyed since January of 2016.
That’s good news for President Donald Trump, who loves to brag about stock gains, but there’s a warning for him in the markets as well — one that hangs over his party’s push for a tax-cut bill by year’s end.
Trump’s approval rating appears particularly vulnerable to a crash in stock prices, data from the Vox/SurveyMonkey Economic Confidence Index suggest. That’s because Trump’s approval is tightly bound with economic optimism, as measured by the index, and optimism is, at the moment, substantially higher among Americans who are invested in stocks.
A market crash would likely hurt those investors’ confidence — and could very well cripple Trump’s approval rating.
The Confidence Index overall, which measures perceptions of the economy on a scale from 1 to 100, rose to 58 in August, its highest level since March.
There was a 10-point gap in the index between people who have money invested in the stock market (who registered 62 on the index in August) and those without stock investments (who registered 52 on the index). That spread has been widening since this spring, with stock-holding Americans increasingly more confident than everyone else. Including retirement funds, about half of Americans are invested in stocks or mutual funds.
Confidence in the economy is tightly correlated with approval of Trump, the SurveyMonkey data show, and Americans with investments in stocks approve of the president at a much higher rate — 47 percent, compared to 34 percent for those without stock investments.
The data also show that Americans with stock investments are much more likely to say they and their families are doing better financially than they were a year ago; that they are slightly more likely to expect their finances to improve in the next year; and that, on several measures, they are much more likely to expect overall economic improvement in the year to come.
The confidence gap makes sense in many ways. The economy is growing, and so are wages, but neither is growing nearly as fast as stock markets are. Stock owners are also more likely to be more affluent, and more affluent people are more likely to have voted for Trump.
Analysts chalked some of the stock gains earlier this year up to optimism for a major tax overhaul bill moving through the Republican-held Congress, which could result in lower tax rates and higher profit margins for corporate America. Those gains have held, with slight wobbling, even as the GOP Congress failed to pass a health care bill, and doubts began to grow about the tax bill.
Now, Republican leaders, including Trump, are making a big push for a tax bill, including a major speech the president delivered in Missouri this week. Their goal remains passage of a bill by year’s end. If that somehow falls show, the market could take a dive — and so, with it, could Trump’s already faltering public approval.