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Trump Says He Saved the US Economy from ‘A Great Recession’


Aug. 1 2019, Published 11:10 a.m. ET

President Donald Trump is famous for voicing his concerns and opinions about the Federal Reserve and the US economy on Twitter. As expected, he lashed out on the Federal Reserve yesterday despite its announcement of a long-awaited rate cut.

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The long-awaited rate cut

The long-awaited rate cut happened yesterday. The Fed cut the federal fund rate by 25 basis points, marking the first rate cut in a decade. The Fed had been feeling the pressure of a rate cut from the market and President Trump. Trade tensions, tariffs, expectations of an earnings recession, and weak inflation forced the Fed’s hand in making the cut.

Though many former Fed leaders were supportive of a rate cut, many were also of the opinion that a cut wasn’t necessary. The economy looked stable. Job numbers were good. In July, consumer confidence rebounded to its highest level in 2019, according to data released on July 30. Consumers have shrugged off trade concerns and expect short-term business conditions to improve in the second half of the year. The advance estimate of second-quarter GDP data released on July 26 also looked upbeat.

Trump lashed out

Before the Fed rate cut happened, Trump had already lashed out at the Fed, saying it had made all the wrong moves and he wanted to see a large cut. He wasn’t happy with the result of the rate cut decision. A USA Today article said the president mentioned that Jerome Powell “let us down” by not signaling further decreases. In a late-afternoon tweet, Trump again mentioned that the market expected to hear that this was the beginning of a lengthy and aggressive rate-cutting cycle. The article also mentioned that Powell told reporters the US economy was doing well and wasn’t in a recession, so a prolonged rate-cutting effort wasn’t appropriate.

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Trump’s tweet about the US economy

The second night of the Democratic presidential debate also happened yesterday. Trump tweeted, “If I hadn’t won the 2016 Election, we would be in a Great Recession/Depression right now.” President Trump has often bragged about how the US economy has improved under his administration. However, a recent Fox News poll indicated that the economy has been at its best since 2001. Trump’s administration hasn’t contributed much.

Job numbers have improved drastically, but ongoing trade escalations have taken a lot out of the market. Many companies have suffered this quarter because of trade tensions, and it’s affected their earnings results.

How did the market react to the rate cut?

Hopes of a rate cut had been driving the market since June, so expectations were that a rate cut would trigger a market rally. However, the markets plunged after the rate cut was announced.

The SPDR Dow Jones Industrial Average ETF (DIA) tracks the Dow Industrial Average Index. DIA fell 1.2% yesterday, and it returned 1.0% in July. The Invesco QQQ Trust, Series 1 ETF (QQQ) tracks the Nasdaq Composite Index. QQQ fell 1.09% yesterday and gained 1.3% in July.

The SPDR S&P 500 ETF (SPY) tracks the S&P 500 Index. SPY fell 1.09% yesterday and returned 1.5% in July. Despite the market’s performance, some cannabis stocks soared yesterday.

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Earnings also drove market’s performance this week

Many major companies released their earnings this week, which has driven the market’s performance. Among them was Apple (AAPL), which released better-than-expected fiscal 2019 third-quarter results, surpassing analysts’ estimates for both revenue and earnings. However, the stock didn’t perform well owing to declining iPhone sales. AAPL rose 7.6% in July.

Samsung (SSNLF) also released its second-quarter results this week. It disappointed investors with a drop in operating profits. General Electric (GE) reported upbeat second-quarter earnings yesterday. It beat Wall Street’s estimates for both its top and bottom lines and fell 0.48% in July. Boeing (BA) released dismal results for its second quarter and fell 6.2% in July.

Advanced Micro Devices (AMD) also released its second-quarter earnings results yesterday. The stock closed July with a gain of 0.26%. General Motors (GM) will release its second-quarter earnings results today. The company announced on July 30 that it was halting production at one of its oldest plants. Its stock rose 4.7% in July.

Stay tuned to learn more about today’s earnings releases.


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