Trump makes US economy great again — at least for now
The UN jamboree, which began last week but which gets serious this week as the big cheeses of the geopolitical world head to the city, involves closing large parts of the swanky east side, with ensuing traffic chaos and travel limitations. But the rest of Manhattan, especially the money machine of Wall Street further south, will just carry on earning a dollar.
The dollars have been rolling in at a rapidly accelerating rate in recent months. The Trump “boom,” as the president likes to think of it, is in full swing, and times have rarely been better in the biggest city in the biggest economy in the world.
How much of that is down to the actions of the 45th US president, rather than the policies of his predecessor or the generally benign backdrop of a growing world economy, is a matter of some debate, but few are doubting that it is real.
Over dinner in Brooklyn at the weekend with a fairly random selection of the city’s entrepreneurial talent, it was clear that the good times are giving people a rosy glow. The restaurant — not by any means one of the top diners in the city, but a good example of the new wave of eateries on the ultra-trendy shore across the East River — was packed. There was standing room only at the bar, and the clientele was spending freely.
My dinner companions were not what you would call Donald Trump supporters — indeed it is hard to find any in New York — but they grudgingly conceded that the US president was delivering on one of his core election messages: To make the American economy great again. Whether the boom was sustainable was a different matter, however.
One was in the fashion retail business, where demand for designer quality denim was better than ever.
Another was in the online luxury market, selling top-of-the-range home accessories to Manhattan’s wealthy elite, and she agreed that consumer demand was at an all-time high.
The third managed a hedge fund portfolio, and he too was enjoying the best of times as the financial indices went to and even surpassed record levels.
None of them were quite sure why things were so good. The president has not really accomplished any of his specific economic policy agenda goals, such as infrastructure spending or tax reform, that had encouraged analysts to forecast a period of growth.
In fact, his failure to deliver on key election promises — on immigration, health care and an end to foreign military entanglements — has cast doubt on whether he could deliver the big economic goals.
It is hard to find any supporters of the American president in New York, but many in the city grudgingly concede that the financial indicators are ticking up.
But that has not stopped the indicators ticking up. The US Department of Commerce announced last month that second-quarter gross domestic product (GDP) had risen by an annualized rate of 3 percent, faster than many had predicted.
That is a long way off Asian levels of growth, but is solid and respectable for a developed economy like the US. The number of jobs continues to rise too, making the recovery one that all Americans, even those outside the rarified levels of Manhattan, can appreciate.
The current quarter will be affected by the chaos and disruption done to the economy by the hurricanes in Texas and Florida. Goldman Sachs said that GDP in the current period is likely to shrink by 0.8 percentage points, which is significant, but the negative effect will be contained within the figures of one financial quarter. The long-term effects of reconstruction investment could actually compensate for the short-term damage.
Financial markets too have helped buoy up the Trump presidency. The S&P 500 is regularly breaking all-time records, while the boom in technology shares so far shows no sign of abating. The so-called “Trump fade” has not materialized yet.
Even the oil price, battered by the hurricane season, is staying pretty close to the American “sweet spot” of between $50 and $60 a barrel where shale production is profitable enough to maintain global market share — at the expense of crude producers in the Middle East and elsewhere.
Some Cassandras are saying it cannot possibly last. Twin “bubbles” in equities and bonds will have to pop sometime soon, they say, pointing to the vertiginous tech valuations as the factor that could prompt a market sell-off. Others look at the increasingly risk-laden global scene — North Korea in particular — as the straw that will break the camel’s back.
All good things have to come to an end, of course, and some kind of correction looks overdue. But New Yorkers will deal with that when it happens. For now, they are making hay while the sun shines.
• Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai
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