Right now, Washington and Wall Street are a study in contrasts. As the White House careens from crisis to daily crisis—the staff turmoil, the stalled GOP agenda, the drip-drip of revelations in the Russia investigation—the corporate world moves from strength to strength. Markets have been on a nonstop rally for months, with the Dow topping a record 22,000 this week; companies are posting the best profit growth in six years (see Business News); and GDP just grew a solid 2.6 percent. This steady economic progress not infrequently falls into the background, as Trump’s latest tweets consume headlines and pundits fret that our institutions are being overtaken by dysfunction and division. “Politics is weird right now,” economist Tyler Cowen recently wrote in Bloomberg.com. But “American business has never been more productive, more open, less racist, and, yes, more normal.”
The economic forward march has given President Trump a degree of political cover. But how long will it last? The stock market keeps riding high in part because of the Trump administration’s successful efforts to deregulate the financial and energy industries, and in part because of hopes that he and Congress can cut corporate and personal taxes. But if tax cuts and other pro-business items on the Republican agenda die amid the turmoil in Washington, as health care did, the stock bubble might pop. The resulting economic downturn could erode Trump’s support among his most loyal supporters and make congressional Republicans feel it’s politically safe to turn their backs on him. On the other hand, if economic growth climbs toward Trump’s promised 3 percent, and wages rise enough for people to feel it, the president will be on much stronger political ground. Special counsel Robert Mueller and his investigation might yet sink this president. But Trump’s fate will be influenced a great deal by which way the economic winds blow.