Recently, the US stock market has experienced continuous sell-offs, heightening market risk aversion. Influenced by repeated tariff policies and concerns about economic recession, the three major indices collectively plummeted on Monday, with the Nasdaq falling by 4% and the S&P 500 dropping 8.7% from its historical high. Despite the downturn in market sentiment, the White House is attempting to downplay the impact of the stock market decline, insisting that investment commitments reflect an optimistic economic outlook.
White House officials stated on Monday that there is a "huge gap" between short-term stock market fluctuations and business investment confidence, suggesting that long-term economic prospects are more valuable than stock market performance. The term "animal spirits" was used to describe the decision-making scenario driven by market sentiment, with the White House implying that the current stock market decline is primarily driven by market panic rather than a deterioration of economic fundamentals.
The recent decline in US stocks is mainly affected by policy uncertainty, especially the US government's decision to impose a 25% tariff on imported goods from Mexico and Canada. After initially announcing the tariff policy, the Trump administration postponed its execution, but reimposed some tariffs last week, causing market concerns. In addition, layoffs in the technology industry have further increased investors' worries about economic growth.
Market analysts point out that the optimism from the end of last year is rapidly cooling, with investors increasingly focusing on economic downside risks and policy uncertainties. Scott Lincicome, Vice President of Economic and Trade at the Cato Institute, believes that the stock sell-off can be attributed to government policy, especially the increase in trade barriers, bluntly stating, "This can be directly pinned on the President."
Trump, on the other hand, downplays the stock market volatility, emphasizing that policy-making will not adjust due to short-term market performance and attributes the market decline to "globalists." In an interview last week, he stated that he was unwilling to predict whether the economy would fall into recession due to tariff policies.
Meanwhile, the White House is actively promoting recent investment commitments from several companies, highlighting that Apple, SoftBank, TSMC, and Eli Lilly will invest hundreds of billions of dollars in the US. White House spokesperson Kush Desai stated that these investments demonstrate industry leaders' confidence in Trump's economic policies, believing that this will drive economic growth and continue the employment and investment achievements of his first term.
