Trump praises stock market highs

Trump praises stock market highs

Trump’s Second Term: Stock Market Gains Amid Mixed Economic Signals

President Donald J. Trump has highlighted record-breaking stock market performance during his second term, with the S&P 500 and Dow Jones Industrial Average reaching all-time highs in early 2026. The S&P 500 rose 13% in the first year of Trump’s second term, though this gain lags behind the 24% rise during his first term and the 41% surge under President Barack Obama’s 2009 recovery. Recent market volatility, however, has tempered optimism. On January 12, 2026, the S&P 500 closed sharply lower, reflecting global investor concerns over potential trade conflicts and economic slowdowns.

The stock market’s trajectory has been influenced by Trump’s protectionist policies, including broad tariffs on imports. While the administration claims these measures have strengthened domestic industries and lowered gas prices, economic analyses suggest U.S. consumers and businesses bear most of the tariff costs. A German think tank study estimates U.S. entities absorb 96% of tariff expenses, with Goldman Sachs projecting consumers could shoulder up to 70% of costs by 2026. These pressures may contribute to a projected 0.4 percentage point drag on real GDP growth and a 0.6 percentage point rise in unemployment for 2026.

Inflation remains a mixed signal. Core inflation, at 3% in December 2025, aligns with Federal Reserve expectations, but specific goods like orange juice and ground beef saw double-digit price increases in 2025. Conversely, gas prices fell 11.5% since January 2025, though Trump overstated the decline in public remarks.

Job growth has also diverged from Trump’s promises. While the White House cited four consecutive months of strong job gains as of July 2025, annual job creation in 2025 totaled 584,000— well below the 2 million average under President Joe Biden.

The market’s current cyclically adjusted price-to-earnings (CAPE) ratio of 40, a level last seen during the dot-com bubble, raises concerns about future returns. With economic data showing a slowdown and geopolitical tensions persisting, investors face a complex landscape as Trump’s second term enters its second year.