ANIMAL SPIRITS
A fourth factor is “animal spirits”, to cite John Maynard Keynes. Economists have always assumed that if businesses expressed public optimism, investors would feel the same. This still holds true: the fact American companies are currently beating earnings forecasts has helped to propel stocks to record highs.
However, the causality is now also working in reverse: it is hard for any corporate leader to express alarm about the outlook, or criticism of Trump, when markets seem so giddily exuberant. A form of crowd psychology is at work that few CEOs dare defy.
Last but not least, there is the issue of artificial intelligence. A host of executives and investors seem to love Trump’s policies on AI, most notably because he is deregulating it under the mantra of boosting growth – an idea that appeals to American executives increasingly scornful of what they see as Europe’s low-growth, regulation-heavy model.
However, there is another implication of the AI boom: It is enabling CEOs to talk to their investors about business uncertainty without ever needing to mention Trump’s name at all.
More bluntly, AI is the ultimate distraction device for the C-suite, since it is now absorbing so much executive headspace and public airtime that there is less space to think about other issues, such as the uglier side of Trump’s policies. It gobbles up bandwidth, literally and metaphorically.
Now, I daresay there will be readers who might disagree with this five-part explanation. Some business leaders genuinely love Trump’s policies, and think they will unleash long-term growth.
But if you think this five-part frame is even halfway accurate, then the key thing to ponder is whether anything might cause the psychology to change. If markets tumble, AI becomes less distracting or tariffs crush earnings, could there be a backlash? Or if Europe recovers, might that take the shine off Trump?
Right now, we don’t know. But what is clear is that it is a fool’s errand to think American CEOs will spark an anti-Trump rebellion anytime soon. That White House “loyalty list” has already done its job.
