The first “Trumpaversary”

November 2017 marks the first anniversary of Donald Trump’s election as the 45th President of the United States. US equity indices have hit new highs over the past year, boosted by strong corporate earnings announcements. Since Mr Trump’s controversial victory in November 2016, the Dow Jones Industrial Average Index has risen by 28.5%, while the S&P 500 Index has climbed by 21.3% and the technology-heavy Nasdaq Index has surged by 30.7%.

Elsewhere in the world, however, Japan has beaten the US: the Nikkei 225 Index has surged by 33.4%. Performance in Europe has also been robust, and Germany’s benchmark Dax Index notched up a rise of almost 28%. The UK has lagged other major markets in comparison, dampened by Brexit-related uncertainties, and the FTSE 100 Index has risen by a comparatively paltry 10% over the same period.

Economic growth in the US has been relatively strong, but it is worth remembering that President Trump inherited a recovering economy from his predecessor Barack Obama. Moreover, the economic upswing is far from confined to the US; growth has picked up around the world, especially in emerging markets. Nevertheless, consumer confidence in the US reached its highest level for almost 17 years during October, and the country’s rate of unemployment has continued to fall, declining from 4.6% in November 2016 to 4.1% in October 2017.

Concerns remain, however, about a persistently below-target inflation backdrop in the US. Over the past year, the Federal Reserve (Fed) has increased its key interest rate three times, from 0.25%-0.50% to 1%-1.25% and the central bank has also begun to cut back its US$4.5 trillion balance sheet. President Trump is set to replace incumbent Fed Chair Janet Yellen early in 2018 with his own favoured candidate, Jerome Powell.

President Trump’s approval ratings have fallen substantially since his election. According to a poll undertaken by the Washington Post and ABC News, his approval ratings are lower than any of his predecessors in their first term over the last seven decades. His “disapproval” rating has risen to 59%, and 55% of those surveyed believe he is not fulfilling many of his principal campaign pledges. Only 33% of respondents trust him. 65% believe he has accomplished either “not much” or “little or nothing”, while 53% believe he has not handled the economy well, compared with 61% in January 2017.

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