The pickup in economic growth, as well as the earnings turn, shouldn’t be fully credited to President Donald Trump, according to Liz Ann Sonders, senior vice president and chief investment strategist at Charles Schwab.
According to Sonders’ recent commentary, economic inflection points and a stronger stock market may have had little to do with the results of the election.
“Trumponomics, the Trump Trade, the Trump Rally — and more recently Trumpocalypse — you’ve heard them all,” Sonders writes. “… I’m not dismissing the impact on confidence readings of the hope for pro-growth Trump administration policies, but as we’ve been pointing out for several months, many of the fundamentals supporting stocks had their inflection points pre-election.”
Sonders looked at the Consumer Confidence Index, the ISM Manufacturing Index and the NFIB Small Business Optimism Index — which have all gone up — and compared it to the Gallup presidential approval rating, which has fallen considerably since Trump took office.
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“If all (or even most) of the improvement in the economy and stocks were attributed to the Trump election win, one would expect his approval rating to have received a bump,” she writes.
Sonders notes that some of the economic and earnings growth actually pre-dated the election.
While the spike in confidence readings post-dated the election, the turn in the ISM Manufacturing Index pre-dated the election, she says.
“In fact, looking at high-frequency economic data more broadly, it began outperforming expectations in mid-October last year,” she writes.