President Trump is still tearing up the old world order. He snubbed world leaders who used to be US allies at a big meeting of the so-called G-7 nations in Quebec. His steel and aluminum tariffs and other trade protections remain in place.
Trump, meanwhile, says Russia should be readmitted to the G-7 meetings, four years after it was kicked out following its invasion of Crimea. And Russian leader Vladimir Putin, sensing an opportunity to drive a wedge between America and its former European allies, is now pushing for a summit meeting with Trump in Austria.
Markets brushed off trade worries and other signs of global disorder this week, with the Nasdaq index briefly hitting a new record high, and the broader S&P 500 drifting upward for the week as well. The Nasdaq is now up about 9% for the year, with the S&P 500 back in positive territory, up 3%.
Our Trump-o-meter this weeks reads BIGLY, our second-highest rating and the equivalent of a B.
Trump got some more economic news to crow about. The Federal Reserve reported that household net worth rose by $1 trillion in the first quarter, topping $100 trillion in total for the first time ever. Since Trump took office last year, Americans’ net worth has risen by $7 trillion. And the Labor Department reported that there are now 6.7 million job openings in the United States. There are only 6.6 million unemployed people, so there are now more jobs open than there are people looking for them.
GDP growth for the second quarter is also looking good, with the Atlanta Fed predicting sizzling growth of 4.6%. Other forecasts are lower, but still generally above 3%. The twin fiscal stimulus of tax cuts and stronger spending finally seems to be kicking in.
Whether this will end well is another question. Ben Bernanke, former Federal Reserve chairman, made a stark prediction at a conference in Washington this week. “What you are getting is stimulus at the very wrong moment,” he said. It will turbocharge the economy this year and next, but “in 2020 Wile E. Coyote is going to go off the cliff.” Many economists agree. Stimulus at the peak of a business cycle can lead to overheating, rising inflation, rising interest rates, and a trap door when the stimulus peters out.
But 2020 is thousands of news news cycles from now. In the meanwhile: BIGLY.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman