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After an opening year of nothing but political fights, President Donald Trump now faces his first bout with economic adversity.
It's not about current economic conditions, which remain solid. The economy continues to grow with strong public confidence, declining unemployment and low inflation — facts that have placed a floor under Trump's historically weak approval ratings and helped them edge back up to 40 percent in the Gallup Poll last week.
But the market turmoil in recent days poses a new test. The president has explicitly adopted the stock market as a measure of his performance. In his State of the Union address just a week ago, he touted record share prices and wealth creation.
On Monday, Trump simply omitted that familiar boast when he addressed workers at a plant in Ohio, with the Dow plummeting even as he spoke. After a lower open, Wall Street turned higher in early trading Tuesday.
Previous presidents tended to shy away from hailing market rises to avoid that very awkwardness. Markets go down as well as up for reasons no White House can control.
What makes Trump different is partly temperamental. An inveterate, impulsive promoter, he cannot resist boasting about any good news and claiming it as his own.
More than that, the economic confidence he has been selling in fact represents the most dominant substantive achievement of his first year. Long before signing tax cuts into law last December, he had stirred the fabled animal spirits of Wall Street with the promise of pro-business policies including deregulation as well as lower corporate rates.
Even after Monday's declines, the Dow has risen 22 percent since Trump took office and 32 percent since he was elected. In office, the populist 2016 candidate has shied away from suggestions of trade war. He put Goldman Sachs alumni in top administration jobs and chose steady-as-she-goes Jerome Powell to succeed Janet Yellen as Fed chair.
But market fears now present Trump with a two-fold problem.
One is fears that his $1.5 trillion tax cut itself has seeded the clouds for economic storms. Trillion-dollar deficits are back. Adding stimulus to a long-running recovery risks overheating the economy, lifting inflation and interest rates and hastening the next recession.
The other is concern about the ability of Trump and his team to competently deal with adversity. Just weeks ago, Trump had to clean up for his Treasury secretary after Steven Mnuchin stumbled in commenting about the strength of the dollar.
Nor does the public have high confidence in Trump's own crisis-management skills. In last month's NBC News/Wall Street Journal poll, Americans rated Trump negatively rather than positively for "being steady and reliable" by 57 percent to 28 percent. He received virtually identical marks for "being knowledgeable and experienced enough to handle the presidency" and "dealing with an international crisis."
A few days of market declines, at a time of global and domestic economic strength, does not define a deep and lasting international crisis. But other challenges the Trump White House faces could increase economic hazards.
In Congress, Republicans and Democrats remain at odds over financing continued operation of the U.S. government, with money due to run out at the end of Thursday. Even if funding is temporarily extended, as expected, the government will run out of authority for borrowing to pay its bills a few weeks later.
Raising the U.S. debt limit — mandatory for preserving the creditworthiness of the world's leading economy — has been the single hardest thing for Congress to accomplish in recent years. Without much legislative success so far, the Trump White House now has to strike that deal under the added pressure of jittery markets.