Is Donald Trump right to be bullish about US economy?

Early this week Donald Trump gave an extremely bullish press conference regarding the US economy. He wholeheartedly believes that in the immediate aftermath of the coronavirus pandemic he can push the economy to previous highs and reinvigorate stock markets. There is one thing being positive and giving upbeat signals but what do the statistics say?

Job losses

Recent data confirms that more than 700,000 jobs were lost in the US in the month of March. This breaks a 10 year string of gains which is phenomenal by any stretch of the imagination. However, this figure is but the tip of the iceberg when you take into account those laid off and furloughed over the last few weeks.

We now know that a staggering 10 million US citizens have filed jobless claims over the last two weeks. These are individuals who are unsure whether they will be returning to work even if parts of the US economy are reopened fairly quickly. The loss of 700,000 jobs is the highest monthly figure since March 2009 and was certainly a shock to many analysts.

Economic growth

At this moment in time it is impossible to even speculate on the economic impact of the coronavirus and the ongoing lockdown. There is also serious friction between Donald Trump and state governors with the impression that some parties are fighting amongst each other rather than working together. Suggesting that he has overall control as and when states come out of lockdown, Donald Trump has put himself on a collision course with many high profile governors across the US.

It is difficult to see the resumption of short-term trade with China, many parts of the US will remain in lockdown for the foreseeable future and the death toll continues to rise. Unemployment currently stands at around 4.4%, the highest since August 2017, although this could jump to around 14% (or higher) in the short term. This is not good for economic activity and will obviously have a significant impact upon the federal government’s various tax income streams.

Investor confidence

The Dow Jones Industrial Average has been bouncing around for some days now, amid rumours and counter rumours regarding a coronavirus vaccine. Even though Donald Trump was suggesting markets could return to previous highs towards the end of the year this is extremely optimistic. Many companies have seen their balance sheets decimated, staff layoffs will impact morale in the future and the burden on the US social system will be huge.

It is also worth noting that the technology sector was very prominent in the rise of the US stock market prior to the coronavirus crisis. Many of these companies are struggling and will have difficulty extracting additional funding with some prominent names expected to go to the wall. Even though traditionally many investors would switch to “safer stocks”, such as banks, no sector and no industry is safe from the impact of the virus. Also, with US base rates at historic lows there is minimal income on savings accounts.


There’s a fine line between optimism and potentially dangerous upbeat comments about the short to medium term. This is a line which Donald Trump is currently treading although at the moment very few analysts or investors are of a similar mind. There are now serious concerns that his election campaign could be hit by rumours and counter rumours about his handling of the coronavirus pandemic. An overoptimistic approach to the US economy/stock-market in the short term would do little to rebuild his battered reputation.

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