Stock markets have been stumbling and volatile since late January. But to hear The Washington Post tell it, that means the tax cuts failed to do what President Donald Trump said they’d do.
“The tax cuts were supposed to be ‘rocket fuel’ for the economy. Since they passed, the markets are down,” declared the April 3, headline. The analysis that followed was from Philip Bump, the Post’s national correspondent.
But the connection the headline tried to make was misleading, since stock markets are “not the economy” — a point Bump buried until the next to last paragraph of his article.
That didn’t stop him from trying to link the two to make the tax cuts and Trump look bad.
Bump wrote that three major stock market indexes are all down since Dec. 22 (S&P down 2.9 percent, DJIA down 2.6 percent and Nasdaq down 0.3 percent).
“Why does that date matter? Because it’s the day that President Trump signed the tax cut bill into law — a bill that, according to him would supercharge the U.S. economy,” he continued.
Then Bump cited a November Trump speech where he praised the market increases and claimed the tax cuts “will be rocket fuel” for the U.S. economy.
“Trump’s favorite measure for the health of the economy over the course of 2017 was those same markets, which seemed as though they were never again going to go down. Until they did — about 40 days after that rocket-fuel bill was signed into law. In early February, the markets sank, kicking off what has been a prolonged stretch of volatility,” Bump mocked.
He acknowledged that stocks rose between Trump’s inauguration and the tax cut’s passage (providing simple percentages of 19.9 percent, 15.4 percent and 20.2 percent) — but Bump didn’t acknowledge those gains were huge or that they were partly driven by anticipation of tax cuts (additional factors included better global growth and strong corporate earnings).
Even the broadcasts networks referred to the market rally as a “Trump rally,” in late 2016 and early 2017. ABC World News Tonight with David Muir admitted on Nov. 30, 2017, that the Dow Jones Industrial Average hit another record high and had been driven by “optimism” about a tax cut package.
Bump also omitted reasons for the market’s recent drops including fears of a trade war with China, and Facebook’s tumble due to outrage over the company’s use of personal information
The story also omitted information about other economic measures, even though Trump’s “rocket fuel” comment referenced the broad economy, not just the stock market.
The OECD increased its estimates for global and U.S. economic growth in March, partially crediting the tax cuts with the higher forecast. In January, the International Monetary Fund also expected stronger economic growth, in part, because of those tax cuts.
Gross Domestic Product came in above expectations in the fourth quarter, and Reuters reported that “analysts believe the economy will hit the Trump administration’s 3 percent annual growth target this year.”