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Red, ugly graphs on our platform determine the unrest of the moment. But economic growth is also on the chopping block.
In recent interviews, President Trump expressed a stony, immobile view of the stock market, as if his goals for the American economy are more important than the whims of Wall Street. He and his economic advisers have developed a long -term vision and recognized short -term pains due to a variety of euphemisms and metaphors such as “detox”, “disruption” and “transition”.
But if there is a method for the madness of the market, we will not see his fruit for some time. All the while the current measures and predictions of the “real” economy are getting darker.
Economic teams have reduced their GDP expectations of 2025. Morgan Stanley now predicts 1.5% growth in 2025, compared to 1.9%, while Goldman Sachs fell his expectations from 2.4% to 1.7%.
To a certain extent, the first team of America of Trump has a point to make: why would a select group of investment bankers and money managers dictate the economic agenda of a country? The stock market, in its worst light, is also a collection of trend hunters and fashion word vultures, a vortex of fickle and insatiable desires. (A more holistic reading of the market, taking into account the pension accounts of ordinary people, is gently brushed aside here.)
But it also expresses something that neither pully pulpit caation nor doe threats can touch: if most people actually believed that Trump’s decisions would lead to long-term growth, the stock market would not go down.
If GDP figures match the ever -gloomy predictions, the objectives of the president may turn out to be too ambitious to be worth it.
In the initial phase after the inauguration, a sympathetic view under strategists was that in exchange for the negative effects of rates and job losses in the public sector, the economy in general would benefit from deregulation, lower energy prices and a more businesslike tax regime. But the market gets the idea that the painful shocks will come first, while the expected benefits can only arrive later.
“The pain is worth the win on the road … That is the new story that comes from Washington,” Mohamed El-Erian, President told Queens College, Cambridge, and former Pimco CEO, to Yahoo Finance earlier this week.
