Researchers find uncertainty about economic policy is slightly higher now than during Obama’s entire tenure
During Barack Obama’s presidency, uncertainty about U.S. economic policy was much higher than it had been during the previous 25 years, according to calculations by a trio of academic economists.
You would think uncertainty would be low now, with economic expansion advanced and secure, the global economy on a stable footing, and a president in the White House focused on helping business by cutting regulation.
But it isn’t. The researchers find economic policy uncertainty is slightly higher under President Donald Trump than it was during an Obama era marked by deep recession, auto bailouts, unconventional Federal Reserve interventions into the financial system and routine brinkmanship between Democrats and Republicans on fiscal policy.
.. “Obama was president in a time when you needed extreme policy action,” said Mr. Bloom. “Trump has incredibly benign economic conditions. He should have very low levels of policy uncertainty.”
It is hard to say exactly why uncertainty is high now. Mr. Bloom said it is likely partly because of big policy changes happening in Washington—such as an aggressive new stance on trade—and partly because of the decision-making process, which he described as chaotic.
.. “It has been a gut punch to tech investors,” Daniel Ives, chief strategy officer at GBH Insights, an investment research firm, said of the Amazon and Facebook developments. “These stocks and their multiples were not factoring in increased regulation.”
.. Complicating matters, it is hard to see a comprehensive policy framework behind Mr. Trump’s interventions into the economy, making it hard to predict what might come next.
.. Some analysts have described the nation’s evolving trade approach as mercantilism, a government effort to prop up exports and restrain imports in pursuit of trade and financial surpluses. But Qualcomm, AT&T and Amazon aren’t about that. Nor is it quite industrial policy, which is government selection of certain industries over others, as Japan practiced in the 1980s and 1990s.
.. “He’s picking winners and losers,” said Matthew Slaughter, dean of Dartmouth’s Tuck School of Business, who also served as an economist at the Council of Economic Advisers under President George W. Bush. “But it is not obvious what the unifying strategy would be and it is not obvious what the definition of winners and losers are in these cases.”
.. “The regulatory machinery is not likely to be put into motion because the president has a grudge against Amazon,” he said.
His advice to Wall Street: “Don’t fear the Tweeter.”