Donald Trump has become the third US president to be impeached. However, Trump’s impeachment hasn’t impacted stock markets, which have continued to trend higher. Previously, Trump claimed that markets would crash if he were impeached.
Trump’s impeachment comes just as 2020 presidential election campaigns are heating up. Meanwhile, with recession fears subsiding, Trump’s economic approval rating has risen. US stock markets are trading at record highs, while unemployment levels are near historic lows. Could Trump’s impeachment be Democrats’ strategic miscalculation?
Trump’s impeachment and the Dow Jones
Last month, after the Dow Jones (DIA) crossed 28,000, Trump tweeted, “Dow hits 28,000 – FIRST TIME EVER, HIGHEST EVER! Gee, Pelosi & Schitt have a good idea, “lets Impeach the President.” If something like that ever happened, it would lead to the biggest FALL in Market History. It’s called a Depression, not a Recession! So much for 401-K’s & Jobs!”
Trump’s tumultuous relationship with the Democrats
The Democrats’ move to impeach Trump is not the first time they have targeted him. Growing partisan politics have driven several frictions between Trump and the Democrats. There’s been the Mueller probe and the longest government shutdown in US history over funding for the Mexico border wall, and Democrats have opposed many of Trump’s economic policies. Trump also slapped tariffs on US steel and aluminum imports, citing national security. This liberal use of emergency powers to attain economic objectives hasn’t gone down well with Democrats.
Markets ignore Trump impeachment
While Trump believed markets would crash if he were impeached, the reverse seems to be happening. The Dow Jones has continued its good run despite Trump’s impeachment. There are several potential reasons for that strength. Firstly, markets may not believe Trump will be impeached, as Senate Republicans wouldn’t support it. Secondly, economic indicators have been strong this month. The United States–Mexico–Canada Agreement and phase one of the China trade deal could also bolster the US economy next year. Markets may be focusing on the strong economy instead of the Trump impeachment.
Did Democrats mess up?
Trump could sail through the impeachment inquiry, given Republicans’ control of the Senate. Furthermore, the impeachment trial could strengthen Trump’s longstanding argument that Democrats have targeted him throughout his tenure.
Forget Trump’s impeachment: It’s the economy, stupid!
During Bill Clinton’s 1992 campaign, strategist James Carville said, “It’s the economy, stupid.” The US economy has been resilient this year, even as several economists saw a recession on the horizon. The employment market has also been quite strong, and stock markets are near record highs. Overall, the US economy has been Trump’s friend this year. On December 18, CNBC reported his economic approval rating had hit a one-year high.
Trump’s tough stance on trade issues also seems to be working. Phase one of a US-China trade deal looks within reach. Also, by renegotiating NAFTA at supposedly better terms, Trump may show the US didn’t get the best deal under previous administrations.
Which way will fence-sitters go?
In my view, Trump’s impeachment may only galvanize diehard Democrats and Republicans. What’s debatable is how the impeachment inquiry could affect swing voters. While Democrats seem to think Trump’s impeachment could win them some swing voters, I don’t think that will be the case. With the resilient economy, strong job market, record-high equity markets, and two crucial trade deals under his belt, Trump could woo swing voters. The far-left economic policies proposed by some Democratic presidential candidates may not convince fence-sitters.