The Illusion of Economic Revival: What Financial Markets Predict About Trump’s Impact on America

In the wake of Biden’s presidency, many Americans have expressed deep frustration over economic instability, particularly concerning inflation and the rising cost of living. The dissatisfaction is palpable, with wages failing to keep pace with surging prices, and economic anxiety becoming a central issue. This discontent has set the stage for the return of former President Donald Trump, who has capitalized on this public sentiment by positioning himself as the champion of economic revival and prosperity. But what do the financial markets really predict about the future under Trump’s leadership, and who will benefit—or suffer—the most?

A Tale of Two Markets:

Stocks and BondsBefore diving into predictions, it’s essential to understand the distinction between the stock market and the credit market. The stock market represents optimism for corporations and wealthy investors, who look forward to gains from policies like corporate tax cuts and deregulation. The stock market’s reaction following Trump’s win was swift and positive, with indices like the S&P 500 and Dow surging on expectations of lowered corporate tax rates and looser financial regulations.

In contrast, the credit market, which deals with bonds and interest rates, tells a different story. Here, the outlook is far more cautious. Bond yields have risen, signaling that investors expect higher inflation and increased government spending that will drive up borrowing costs. While the stock market may revel in short-term gains, the credit market braces for an inflationary period that could have long-term economic repercussions, especially for the young, the poor, and marginalized communities.

Winners in the Market: Corporations and the WealthyStock

Market Boom: One of the first clear winners under Trump’s potential economic plan is the stock market itself. The markets have rallied in anticipation of corporate tax cuts, with predictions that the tax rate could drop from 21% to 15%, boosting corporate earnings and shareholder wealth. This surge translates to immediate gains for those who already own significant stock portfolios—primarily wealthy individuals and large institutions.

Banks and Financial Services: Financial institutions such as JPMorgan Chase, Goldman Sachs, and Morgan Stanley have seen substantial gains, some up to 13% in market value. The expectation of deregulation and increased interest rate spreads promises a lucrative period for banks. However, these benefits come with a caveat: while banks profit from higher mortgage rates and lending spreads, average consumers bear the burden of increased loan costs.

Cryptocurrency and Risk Assets: Cryptocurrencies, led by Bitcoin, have also surged on the expectation of a deregulated financial environment. Investors anticipate Trump will take a more hands-off approach, potentially even firing key regulators like Gary Gensler of the SEC. This lack of oversight may spur innovation and investment in the space but at the expense of increased volatility and the potential for scams, which often hit less financially literate and lower-income individuals hardest.

The Losers: Young People, Minorities, and the Environment The Young and Future Generations: The optimism in the stock market today is built on promises that will have repercussions for future generations. Trump’s anticipated deficit spending, primarily to fund corporate tax cuts and possibly new military investments, will drive up national debt. This means that while older generations may reap the benefits of stock market gains now, the younger generations will inherit a future burdened by debt and higher interest rates. The credit market’s response is a warning signal: inflation will drive up the cost of borrowing, making everything from student loans to mortgages more expensive.

Low-Income and Minority Populations: Deregulation and corporate tax cuts might stimulate certain sectors of the economy, but they come at a cost. Low-income and minority communities, who are already marginalized economically, will be further squeezed by rising interest rates and decreased public investment. With more government revenue funneled into debt service and entitlements for older generations, there will be fewer funds for programs that support social mobility, public education, and healthcare.

The Housing Market Crisis: The rise in bond yields foreshadows higher mortgage rates, making it even more difficult for young and low-income individuals to purchase homes. Real estate stocks have already taken a hit, as markets anticipate increased costs due to tariffs on imported construction materials and tighter immigration policies that will restrict the labor pool, driving up wages in the sector. This combination will lead to higher home prices, squeezing first-time buyers out of the market and exacerbating an already dire housing crisis.

The Environment Takes a Back Seat: Clean energy stocks have plummeted as Trump’s return signals a rollback on climate commitments. His administration plans to leave the Paris climate agreement, halt renewable energy projects, and repeal critical components of the Inflation Reduction Act that fostered growth in green technology. The shift back to favoring fossil fuels—evidenced by the spike in stock prices for companies like ExxonMobil—will have a devastating long-term impact on efforts to combat climate change. The planet, and by extension future generations, will bear the brunt of these regressive policies.

The Irony of the “Robust Economy”

The bitter irony is that many Americans, frustrated by inflation under the Biden administration, cast their votes in hopes of ushering in a more prosperous economic era under Trump. Yet, what the markets and investors are signaling is an economy that will likely deepen the economic challenges that led to wage stagnation and financial insecurity in the first place.

The financial benefits will accrue to corporations, shareholders, and the wealthy, leaving the young, the poor, and marginalized communities to contend with higher debt, unaffordable housing, and a deteriorating environment. The promise of economic revival under Trump is, in reality, a continuation of policies that enrich the few at the expense of the many.

One thing you have to hand to Trump is his ability to successfully convince millions that he is the solution to a problem that he, along with his party, has perpetuated and has no real plan to solve. It is a masterstroke of political maneuvering that leaves the very people who are most affected—the young, the low-income, and marginalized groups—left holding the bill for an illusion of economic growth that primarily benefits the few.