By Isaac Cohen*
The Standard & Poor’s 500-stock index increased 12 percent since President Donald Trump’s election in November and the first days of March. There was hope that the incoming President’s three point agenda, of tax reform, less regulation and more infrastructure spending, would ignite more vigorous economic growth, beyond the 2 percent average of the last seven years of slow economic recovery from the Great Recession.
However, the winds shifted after the failure by the House of Representatives of approving the long promised “repeal and replace” of the health insurance bill. This caused a reversal in the markets, which pushed back some indicators to the levels they were before the presidential election. For instance, the Mexican peso regained strength, after falling because of the protectionist threats emanating from the White House.
Economic fundamentals could not be blamed for the market reversal. In mid-March, indicating a strong economy, the Federal Reserve increased the federal funds interest rate and started discussing how to reduce the $4.5 trillion central bank portfolio. Rather, as remarked by an analyst quoted in The Wall Street Journal, the Republican control of the White House and a congressional majority, thus far, have not generated positive legislative outcomes.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media. Former Director, UNECLAC Washington