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Investors Losing Faith in Trump?

Walter Russell Mead

Even as U.S. markets soar, investor confidence in the dollar is faltering, partly as a result of President Trump’s difficulty delivering on his promised economic agenda. The Wall Street Journal reports:

The dollar suffered through its worst stretch in six years during the first half of 2017, as investors turned more confident that economic recoveries around the world are gaining on or surpassing growth in the U.S. […]

Few had expected such a turnabout even six months ago. Investors had driven the dollar to a 14-year-high after the November U.S. presidential election on hopes that Donald Trump’s plans for a tax overhaul, deregulation and fiscal stimulus would accelerate growth while the Federal Reserve also raised interest rates.

Instead, the Trump administration’s plans have repeatedly hit political roadblocks while U.S. growth, employment and inflation data have begun to soften.

Investors continue to think that many of Trump’s economic ideas would be good for the U.S. economy (not protection, but tax cuts, deregulation, infrastructure, development of energy resources). However, they are losing faith in his ability to make much of that happen.

The less chance Trump has of cementing his appeal through broadly-shared, robust economic growth, the more he will have to try to whip up his base and to further polarize the country.

GOP leadership in Congress needs to understand that delivering on the elements of the Trump agenda that command broad support is the key to maintaining an increasingly fragile party unity.

But this is not just about Trump. Voters have given the GOP an extraordinary mandate: both houses of Congress, the White House, and a slew of gubernatorial mansions and legislative chambers across the country—by some measures, the greatest GOP mandate in 100 years. If the party fails to produce results with all these advantages, the cost to the GOP brand and to the party’s cohesion could be severe.

The clock is ticking.

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