Mar 16, 2017

Why investors are giddy for Trump's anti-regulation campaign

Paul Sancya/AP

The Trump Rally has been on pause for two weeks, but its record since Election Day has nonetheless been close to historic. There's no doubt that investor euphoria is in part due to change in leadership in Washington and the promise in particular of less regulation.

Why it matters: Eliminating regulation is the most potent ways for government to boost economic growth, but the market may be overestimating what Trump can deliver without 60 votes in the Senate.

Data: S&P Global Market Intelligence; Chart: Andrew Witherspoon /

The Trump rally has been dominated by the financial service sector, and independent banking analyst Chris Whalen says this is because banks have the most to gain from deregulation, in the form of a Dodd-Frank overhaul.

Data: Mercatus Center; Chart: Andrew Witherspoon /

The cost of regulation: Wall Street has evidence to support its optimism. Research published by George Mason University's Mercatus Center over the summer estimated that the costs of regulation in terms of economic growth. It found:

  • National income in 2012 would have been $13,000 higher per person had the federal government added no regulations between 1980 and 2011.
  • It assumes that for every regulation added, one would be eliminated. Trump is promising to eliminate two regulations for every one added, a policy that could supercharge growth over the long term if faithfully implemented.

Not so fast: For one, the costs of not regulating business — like worse health and climate change — often don't show up in GDP figures.

  • The most significant EPA regulations claim to save thousands of lives — a priceless benefit for those helped by these rules.
  • To make large and swift contributions to American businesses and the economy, Congress would have to change the laws that support regulations. But with healthcare and tax reform higher priorities than financial regulations, it's not clear we'll get a Dodd-Frank overhaul anytime soon. As Whalen puts it, "Wall Street is way over its skis," when it comes to bidding up banks.

Go deeper

2019 stock market gains still leave Trump behind his predecessors

Data: FactSet; Chart: Axios Visuals

The S&P 500 has jumped 42% under President Trump — according to market data from the inauguration through 2019's final day of trading.

Why it matters: Trump uses the stock market's surge as a barometer of his presidency's success — one that, along with the 50-year low unemployment rate, he's sure to continue to tout as the 2020 election approaches — but the gains under him lag those under former Presidents Barack Obama, when stocks rebounded from the lows of the financial crisis, and George H.W. Bush.

U.S. economy adds 145,000 jobs in final report of 2019

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 145,000 jobs in December, the government said on Friday, below economists’ expectations of 160,000. The unemployment rate held at 3.5% — a 50-year low — while wages grew 2.9% from a year earlier, the smallest gain since July 2018.

Why it matters: The U.S. job market held up in the final month of 2019, but heads into the election year with a slowing pace of job creation and wage growth.

Go deeperArrowJan 10, 2020

EPA's Trump-appointed scientific advisers criticize new proposals

EPA administrator Andrew Wheeler in September 2019. Photo: Zach Gibson/Getty Images

The Environmental Protection Agency is moving forward with efforts to weaken wetland regulation and restrict the use of scientific studies to inform new rules, despite criticisms from its scientific advisers, the Washington Post reports.

Why it matters: The claims that there are flaws in the science driving the administration's proposals are especially noteworthy coming from scientists and industry members who were appointed to the EPA's Scientific Advisory Board (SAB) by the president himself, per the Post.

Go deeperArrowDec 31, 2019