The Dow Jones Industrial index has risen above the 20,000 mark, reaching a historic psychological milestone
The US stock market has been rising since Donald Trump won the Presidential Election, setting off what many have called “The Trump Rally.”
Trump’s economic plan promises massive business tax cuts, reductions in middle-class taxes, and a big infrastructure program. The combination of those factors is expected to increase economic growth – at least in the short-term – and this expected growth is fuelling increased business confidence and investment.
The market is a mind-game
As the Dow reaches 20,000 this is a great opportunity to think of how much the market is a mind-game. Trump has barely implemented any policies – only executive orders so far – and on the day he was elected there was no physical change in the amount of resources or workers in the economy.
The rise in the stock market is so far based only on the mental picture investors have of a grown economy and rising prosperity.
This raises important questions about how we grow economies in today’s world. As much as leaders focus on policies and specifics, there is an argument to be made that the psychological environment in any country or region matters just as much, if not more.
If leaders can create a sense of economic confidence, people will be more willing to spend and invest. That spending and investment can create real, tangible products through increased demand, and create real jobs through increased hiring.
That means a simple change in the mental attitude of a group of people can lead to real, physical changes later on.
In our increasingly networked world, this opens up a new perspective on leadership and exciting new possibilities for creating growth.
Photo – CNBC Screenshot