Economic Indicators Show Mixed Performance Under Trump’s Second Term

How is America’s economy performing under Donald Trump’s second term? Recent economic indicators show mixed results, with some key metrics below pre-election levels. The S&P 500 index currently stands at the same level as on election day, while the euro-to-dollar exchange rate and ten-year government bond yields have also remained relatively flat. Bitcoin prices have similarly declined compared to election-day levels.

Despite market resilience during Trump’s first term, where the S&P 500 increased by nearly 70%, the second term has presented greater challenges. The stock market is now below pre-election levels due to concerns about the administration’s economic policies, particularly tariff-related inflation risks. Business leaders are delaying investments amid economic uncertainty, and consumer confidence regarding short-term economic conditions has reached a 12-year low.

Wall Street initially responded positively to Trump’s re-election but has since experienced declines due to fears that tariffs will increase costs and reduce profit margins. Treasury Secretary Scott Bessent has characterized these market corrections as “healthy” and “normal,” while the president has described them as part of a necessary “period of transition.”

Currency markets have shown volatility in response to Trump’s tariff threats, with the dollar appreciating in early February before depreciating in March. Although the dollar remains the world’s primary reserve currency, its status as a “safe haven” is diminishing.

Ten-year Treasury bond yields initially rose after Trump’s election victory but have since declined. While White House officials attribute this to successful spending reduction efforts, many analysts believe it reflects expectations of economic slowdown.

Cryptocurrency markets have also underperformed despite Trump’s campaign promises to make America a global leader in digital currencies. Although bitcoin prices surged immediately after the election, they have since declined significantly following Trump’s inauguration.

— news from The Economist

— News Original —
Donald Trump’s first 100 days: tracking promises, executive orders, legal challenges and cabinet picks

How is America’s economy faring under Donald Trump?

Change since election day

S&P 500

↓ 0.0%

Euro per $ exchange rate

↓ 0.0%

Ten-year government -bond yields

↓ 0.0%

Bitcoin price

↓ 0.0%

For all the chaos of President Trump’s first four years in office, markets were remarkably resilient. The S&P 500 index of big American firms climbed by nearly 70%; riskier bets such as bitcoin rose even further. Mr Trump’s second term has proved rockier. The S&P 500 is now below where it was before election day. The president’s erratic economic policies are partly to blame. Investors fear that Mr Trump’s tariffs will stoke inflation and depress economic growth. Company bosses, faced with extraordinary economic uncertainty, are delaying investments and issuing warnings about future earnings. Consumers are downcast too. Expectations about the economy’s short-term health are at a 12-year low. Until recently, such pessimism was mainly found in Democratic-leaning parts of the country; now the gloom is evident among Republicans too.

Stockmarket

S&P 500, election day=100

At first, Wall Street cheered Mr Trump’s victory. But today shares are below where they were on election day, owing to fears that the president’s tariffs will increase costs and squeeze margins. The administration has been blasé about the tumbling stockmarket. Scott Bessent, the treasury secretary, has called such corrections “healthy” and “normal”. The president himself has said that there will be a “period of transition” while his painful economic policies take effect.

Exchange rates

Euro per $, election day=100

Currency markets were jumpy in the early days of Mr Trump’s second term; now they shrug off the president’s constant tariff threats. The dollar appreciated in early February, as traders bet that tariffs would fuel inflation and force the Federal Reserve to tighten monetary policy. In March, however, the greenback depreciated owing to fears about the impact of tariffs on economic growth. The dollar is still the world’s reserve currency, but its reputation as a “safe haven” is weakening.

Bond yields

US ten-year government-bond yields, election day=100, log scale

President Trump loved to take credit for a booming stockmarket during his first term. Now his preferred measure of success is the yield on ten-year Treasury bonds. Those yields rose after Mr Trump’s election win, but have fallen since mid-January. White House officials claim that bond markets are responding to the administration’s efforts to cut spending and reduce government borrowing. A more likely explanation is that investors are anticipating an economic slowdown.

Cryptocurrencies

Selected coins against the $, Nov 5th 2024=100, log scale

If one asset class was poised to outperform during the second Trump administration, it was cryptocurrencies. On the campaign trail Mr Trump pledged to make America “the Bitcoin superpower of the world and the crypto capital of the planet”. In March the White House established a strategic bitcoin reserve. But there have been few signs of a boost to digital currencies: although the price of bitcoin surged in the weeks following Mr Trump’s election, since his inauguration it has slid by double digits.

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