By Adam Gingrich
PA Political Consultant @DissingerToupee
Economists have been all over the map with their economic analysis of a Trump presidency. Make no mistake, they are as divided by partisan lines as they are by their respective provisional core sector needs. Be that as it may, what most economists overlook in America is the power of the consumer confidence index to essentially mitigate, if not significantly alter, the down-trending aspects of our economy.
In the coming days, we will be drowning in siren calls from the leftist media sources about the upcoming market correction. True, the bullish market that’s heading into a consumer-friendly holiday shopping season will tend to hide some of the global and domestic blemishes. There is no hiding from the coming Fed rate increase. A once speculative quarter point could be dwarfed with a half point hike, and beyond. In a strong dollar economy, a quicker correction may actually be better than a more gradual one.
A strong dollar will trigger a massive partisan debate among economists on the impacts on our import/export ratio. In a typical vacuum model, a strong dollar will significantly drive up costs at home, as other countries adjust to the economic conditions with tariffs and other protective measures. However, deregulation in many industry sectors can produce comparatively quick domestic productivity. So, this means what? Americans can bolster that import/export differential with a healthy dose of consumer confidence. When we continue to buy and consume at a steady increment, we offset the deflationary proclivities of a strong dollar global economy. America, as its core, has always had the ability to override certain economic models, both with under-confidence and over-confidence. It’s the nature of our hyper-capitalist roots.
A political economist looks at a market scenario and trends with an eye on factors traditional economist do not. While a strong dollar and flat oil price economy would unequivocally rattle a traditionalist, a political economist sees mitigating potential in a President Trump. Trump exudes mystical power of American Exceptionalism and has unguarded optimism for GDP growth, no matter what the global market picture. Without a doubt, that confidence must trickle down to consumers for us to avoid a sizable correction in our domestic markets.
Look. I’m not Larry Kudlow and I’m not pretending to be, but we have built a movement here in this country behind a man of extraordinary economic ability and senses. Trepidation and a sell-off attitude among the populace of our nation will undoubtedly ripple through the markets and hasten a recession in the next fiscal year. Already some economists are calling this current rally ‘exclusive’ to financials and energy sectors. That is a short-sighted and obvious view considering Trump hasn’t even sworn in yet. To be certain, a rise in European populism and Chinese currency undergoing necessary correction, will shift the global playing field. Couple that with the potential of three straight Fed rate hikes and it will require a sustained consumer confidence here to ride the rollercoaster. So what? We rose the political rollercoaster with Donal Trump for eighteen months and defied every expert analyst on the way. We didn’t do it with reassuring poll numbers, either. We did it with a near blind and hopeful confidence. Certainly, we can reapply the model of trust to Trump’s economic agenda. Surely, we can tell our broker to take a hike with the same confidence we told the pollsters to take a hike.
The US economy is not some independent, free-floating enigma; it always has and always will be susceptible to the whim of its consumers. Am I over-simplifying a fantastically nuanced subject? Yes. Am I fundamentally wrong? No. So stop watching the DOW and S&P and wondering how high it can go, your 401k isn’t going to experience anything like 2002 or 2008, so relax and enjoy the ride on the Trump ship, the USS Confidence.