So does President Trump deserve credit for these recent upbeat results or is this just economy finally getting over the Great Recession? Normally, we'd say no to the former, since Trump has yet to enact his economic agenda.
But in this case, Trump's pro-growth agenda marks a dramatic turnaround from the Obama years. And as a direct result, a multitude of surveys have shown a huge increase in optimism among business owners, investors, and the public at large. The National Federation of Independent Business' small business optimism index hit a 12-year high in January. The IBD/TIPP Economic Optimism Index was the highest it's been since October 2004. The Dow has gained nearly 17% since the November elections.
This sudden change of heart appears to be having an immediate impact on the economy. The unexpected rise in home sales, for example, is being driven in part by "a postelection jump in mortgage rates, led by optimism about President Donald Trump's plans to ease regulations and spur economic growth," noted Crain's Business. The jump in capital goods orders "is a sign that businesses might be following up buoyant postelection sentiment by spending more after years of tepid global growth," according to Bloomberg.
Whether this will last depends on whether Trump gets his economic policies in place.
In the meantime, it's worth asking why it is that economists consistently overestimated the economic impact of Obama's tax-regulate-and-spend policies, and now appear to be underestimating Trump's pro-business agenda.
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