I believe everyone is as curious as I am about why the US economy can continue to expand despite the panic and uncertainty in the market despite the slowing global economic trend and the rising trade turmoil. So far, the current US economic expansion has lasted for 124 months, making it the longest economic expansion cycle in US history. The stock market has experienced 65 large-scale pullbacks since the bull market in March 2009, without exception, the US stock market has ushered in a correction and rebound after each technical bear market and serious capital flight.

The S & P 500 index above experienced three volatile declines in 2019 (including increased Sino-US trade, Trump tariffs threatening China, and upside-down spreads), and is now just 1.3 per cent below its new high of 3025.86 on July 26th. Some in the market are even predicting that this economic cycle will last throughout 2020 if Trump continues to be elected.

Robert Shiller, an expert in behavioral finance and Nobel laureate in economics, said in an interview last week that "I believe the role models and remarks of our motivational presidents in luxury have inspired long-term strong consumption levels in the United States." He believes that the current expansion of the United States and the strength of the stock market are related to the Trump effect formed by President Trump's various means of promoting economic policy (fiscal tax cuts, foreign trade). Unless this trend is cut off by Democratic candidates in the November election, there may not be a recession in the next three years. Shiller's description of the president seems to be different from the president we used to know.

So what about the so-called Trump effect?

1. The increase in wages spurred consumption. Thanks to Mr Trump's deregulation of financial institutions and tax cuts for companies, wages in the US rose by an average of 6.21 per cent in 59 years and retail sales grew by 4.1 per cent.

2. Trade wars and impeachment add more uncertainty. Another significant effect of the Trump effect is that the trade war has created more uncertainty about the economic outlook. His radical governance and diplomatic style has led to an earlier impeachment by the Democratic Party. The Democratic Party generally advocates higher taxes, especially on personal wealth. )

3. Consumers save more. On the first anniversary of Trump's election in November 2017, total personal savings in the United States rose to $983 billion in December from an average of 409 billion in the past 90-08, and reached a new high of 1.3 trillion in August. The personal savings rate (the ratio of personal savings to personal disposable income) rose from 6.5% in 2017 to 8.1% in August this year.

4. Income grows faster than expenditure. From May 2017 to August this year, real personal disposable income in the United States grew faster (7.8%) than real personal consumption expenditure (6.6%).

The current Trump effect bandForward-looking impact on the overall economy:

Real GDP growth in the third quarter of 2019 was a seasonally adjusted 1.8 per cent, according to GDP data from the Federal Reserve in the Atlanta region on October 17th. (the blue part of the chart shows the average range of the forecast), of which residential investment increased by 6.2%, while commercial fixed asset investment fell by 1.2%.

Among the economic leading indicators released by the American Chamber of Economic consultation, the leading index of the US economy peaked in July, then fell 0.2 per cent in August and 0.1 per cent in September, mainly due to the cyclical decline in manufacturing, the cyclical decline in housing construction permits, and the flattening of interest rate spreads. The current economic indicator (CEI) remained at the August level in September, with an annual increase of 1.5% over the same period last year, indicating that real GDP in the United States is continuing to grow.

Generally speaking, the Trump effect is good and bad for the US economy.It is undeniable that the cycle of US economic expansion is still continuing and may continue until next year's US election.As for the "model of presidential luxury" mentioned by Shiller, in my opinion, it does not apply to 99% of the population of the United States, and for those 1% of high net worth people, what they should worry about most now is not how to emulate the president's life, but to focus on the present, save more resources in case Trump's defeat in the Democratic Party leads to the cessation of the Trump effect and the increase in taxes.