Russiaphobia just wiped out $120 billion in wealth; luckily the Trump economy added an additional $300 billion
By Kent R. Kroeger (July 29, 2018)
Combined, the roughly 20 percent drop in Facebook and Twitter stock prices on Friday wiped out about $120 billion in shareholder value.
Coincidently, on the same day Facebook and Twitter shareholders took a giant hit to their net worth, the U.S. Bureau of Economic Analysis announced the U.S economy (as measured by GDP) grew 4.1 percent last quarter.
“The Republicans giveth and the Democrats taketh away,” piped a radio host on an afternoon talk show here in Philadelphia.
To give the Republicans total credit for the current strength of the U.S. economy may be an over-simplification of how the economy works, but there may be some merit to the claim.
But to imply the Democrats are responsible for Facebook and Twitter losing between 15 and 20 percent of their stock value? That assertion strains even my credulity.
Still, let us give both assertions a spin.
Is the Trump administration responsible for current economic growth?
To the extent any president can alter the direction of the economy in the short-term, Trump has probably done as much as any past president during peacetime.
The Trump tax cut (which largely went to corporations and the wealthiest Americans). A surge in defense spending. A rollback in some environmental regulations, and on-going attempts to repeal others.
All potentially impactful on the economy.
But when the recent quarter’s GDP surge of 4.1 percent is viewed relative to the past 70 years (Figure 1), it is hardly outstanding. It’s good, but not unprecedented.
Nonetheless, recent economic growth has been stronger than the Obama administration’s average growth rate, and it is reasonable to suggest Trump has had a marginal impact on the economy.