Market Overview

The surprising reasons why Trump’s trade wars will boost U.S. jobs — and stocks – MarketWatch

1. What if Trump’s trade war leads to less protectionism and more global prosperity? Before launching his economic wars, Trump bolstered the home front’s economy with deregulation and tax cuts. He figures that strength will allow the U.S. to win his wars without much, if any, pain at home. So far, the U.S. stock market seems to be siding with Trump’s approach.

2. What if Trump’s deregulation unchains the animal spirits of businesses? It’s impossible to measure the impact of Trump’s deregulation of business on S&P 500 SPX, -0.17% earnings. The stock prices of small corporations have been outperforming the larger ones since Trump was elected in November 2016. Since then through last Friday, the S&P 600 SmallCaps stock price index is up 50.3%, outpacing the 34.4% return for the S&P 500 LargeCaps and the 34.5% gain for the S&P400 MidCaps.

3. What if jobs do come back to the U.S.? Since November 2016, payroll employment is up 3.9 million, including 412,000 manufacturing jobs. The unemployment rate has dropped from 4.6% back then to 3.9% during July. Trump obviously relishes taking credit for all this.

4. What if the pace of technological innovation is increasing, disrupting business models in ways that keep a lid on inflation and finally boosts productivity? The rebound in manufacturing employment mentioned above augurs well for manufacturing production, and possibly for productivity. If Trump succeeds in bringing production back to the U.S., then manufacturers might be hard-pressed to find enough workers and turn to boosting their productivity instead of raising their wages.

The surprising reasons why Trump’s trade wars will boost U.S. jobs — and stocks, MarketWatch, Sep 05
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