Over the last 130 years, stock market gains have been common under most presidents. However, the annualized returns of the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have been higher under Donald Trump than under most presidents since the late 1890s. While President Trump boasts about stock market gains, inflation remains a major concern.
Trump has criticized the Federal Reserve for not lowering interest rates, believing the U.S. should have the lowest rates globally. However, Trumpflation—inflation driven by Trump’s policies—and the AI revolution make it impossible for the Fed to cut rates. Trump’s policies, including tariffs and the Iran war, have contributed to higher inflation.
The Iran war disrupted oil supply, raising prices, while tariffs increased manufacturing costs. Additionally, the AI infrastructure build-out exacerbates inflation due to supply-demand mismatches. The Fed’s preferred inflation metric, PCE, hit 3.7% in July 2026, far above the 2.0% target.
Trump’s vision of a 20% GDP growth rate through lower interest rates is unrealistic due to these factors. Lower rates would benefit economic growth but risk slowing AI investments and debt servicing. The Fed’s response to inflation will likely involve rate hikes, which could disrupt Wall Street’s bull market.
Source: The Motley Fool
