Late last week, the Washington Post reported there were differing views within the White House concerning the economy. Aides have been warning President Donald Trump that an economic slowdown in the coming months is possible and it may impact his 2020 reelection prospects, but the president is determined to use a “public messaging campaign” to convince Americans that the economy remains vibrant. This has led to conflicting signals from the White House on the economy, the Post reported.
While these differences are conflicting — and while the aides may well be right in their assessment — Trump is correct that messaging is important, especially from the commander in chief. A president’s words can influence what the economy does or doesn’t do, at least to a degree. And the last thing Americans need is for a president to be outwardly pessimistic about the economic outlook.
So, words DO count — and it’s too bad the president himself didn’t keep that in mind last Friday.
On that day, the Twitter account of the CNBC financial cable network recorded unfolding events and their real-time impact on the markets. A thread from the day offers a telling illustration.
Friday opened with Federal Reserve Board Chairman Jerome Powell speaking at a central banking symposium in Jackson Hole, Wyoming, during which he said the board will do all it can to sustain federal economic expansion. The Dow Jones index, which had opened the morning drifting downward, ticked into modest positive territory on that news, with the NASDAQ and S&P 500 following suit. CNBC tweeted that out at 9:43 a.m. CT.
But then Trump took to Twitter and lambasted the fed for doing “nothing.” (Trump later referred to Powell, who the president himself named to the fed post, as the “enemy.”) Moments later, the president tweeted that, in response to new China tariffs, “American companies are hereby ordered to immediately start looking for an alternative to China.” The Dow, which had been up by as much as 45 points following Powell’s speech, nosedived to a 190-point loss by about 10:45 a.m.
Trump also tweeted, “I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE .. .all deliveries of Fentanyl from China (or anywhere else!).” The stock prices for those companies plunged. By noon, the Dow Jones was down 514 points.
The afternoon was no less volatile, with the jittery Dow dropping more than 740 points at one point before finishing down 621.72.
Perhaps what happened Friday was an indication of growing economic weaknesses, which the president does not acknowledge (and/or instead blames on the media). Or perhaps it was a hypersensitive market response to the president’s words, which have a tremendous psychological impact on the economy, no matter who is in the White House and no matter what state the economy is in. It may have been a combination of both factors. Either way, a lot of money was lost that day.
If the president wants to use a positive messaging campaign, that’s fine — even recommended — but he needs to recognize a couple of things.
First, Twitter tantrums from the president can have a profound impact on the messaging of any topic. Cooler thinking must prevail.
Second, if the president intends to bolster economic morale with positive messaging, he must also offer some recognition of the existence of worries and hardships. When he dismisses warnings by saying the economy is “phenomenal” and “incredible,” he’s glossing over, for instance, the hardships being endured by farmers, especially with the ongoing tariff war with China, or people who are struggling to make ends meet. Failing to do that makes him appear out of touch. Empathy has always been a key element of positive messaging from a leader.
Economic volatility is often a reactive psychological phenomenon, and the president should do his best to exude positivity, as well as an acknowledgement that there may be problems. And impulsive outbursts can detail all other intentions. It’s a tricky balancing act, but not impossible. In fact, it’s imperative.