Trump, the Coronavirus Panic, and the Stock Market

UPDATED 03/16/20

A writer at The Washington Post compiled a record of President Trump’s statements about COVID-19 through yesterday. Whether it is a complete and unbiased compilation I will leave to you to investigate and decide. Let’s just say that it doesn’t put Mr. Trump in a good light, which was undoubtedly the writer’s intention given the identity of his employer.

I say that the compilation doesn’t put the president in a good light because his optimism has been depicted as a manifestation of ignorance and stupidity. But — as was obvious to anyone with a modicum of common sense (i.e., not rabid reporters and other leftists who won’t let a crisis go to waste) — Mr. Trump was merely striving (in vain, it seems) to defuse the panic that the media and disloyal opposition have been intent on spreading.

The president’s declaration today of a national emergency would seem to be an admission that he had been unduly optimistic and glaringly wrong in his earlier statements. But that remains to be seen; as of now, the incidence of COVID-19 in the U.S. accounts for only a minute fraction of the populace (6/1,000,000), and the number of deaths accounts for an almost invisible fraction of the populace (2.2 percent of cases thus far). The cancellation of events and the widespread practice of self-quarantine and isolation will do much to reduce the incidence of COVID-19 from what it would otherwise had been. But it is still far too soon to know how bad it will get in the U.S.

According to the article in the Post, president made his first public comment about COVID-19 on January 22. The full effect of that statement, if there was any effect, would have been reflected in the Rasmussen Reports Presidential Tracking Poll of January 27. As it happens, Mr. Trump’s approval numbers didn’t vary much after that date until the week of February 24-28, when they jumped and then dived.

What happened during that week? Trump’s visit to India (which seemed to be a plus for him) was followed by a sharp drop in the stock market. Trump’s approval ratings haven’t changed much since February 28 (see the first graph below), despite (a) the spread of COVID-19 in the U.S., (b) panicky responses by opportunistic media types and Democrats, (c) a rising tide of closures and cancellations, (d) a brief recovery in stock prices followed by sharp declines (see the second graph below), and (e) today’s partial recovery in the wake of Trump’s declaration of emergency (again, see the second graph).

What does it all mean? Trump’s approval rating, it seems to me, is related directly to the state of the stock market, which is related directly to fears about the economic effects of COVID-19, which is driven by fears about the spread of COVID-19 throughout the world and in the U.S., in particular. That is to say, most voters are sensible enough to know that what the president says about the disease has next to no effect on its incidence, and therefore next to no effect on them, personally. But — out of long and misguided habit (driven by the media and the professoriate) — a large share of the electorate holds the president responsible for short-run changes in the state of the economy. The stock market reflects expectations about those changes, usually in an exaggerated way.

Sic semper boobus americanus.

I expect today’s jump in stock prices to show up in Monday’s Presidential Tracking Poll. UPDATE: Well, the Fed did it again, with another panicky (and probably ineffective) rate cut, which sent the market tumbling (though it’s recovering somewhat at this moment).

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