How did Trump’s first 100 days impact your 401(k)?

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How did Trump’s first 100 days impact your 401(k)? It’s time to look.
Story by Michelle Singletary

I finally looked. It was ugly.

My husband and I had a financial meeting over the weekend, which we try to do quarterly. As part of the process, we needed to update our net worth statement. So I reluctantly signed into the portal for my 401(k).

After reviewing the account, I sat back on the couch to calm myself. The losses — on paper, at least — hurt.

My husband and I were thinking of withdrawing some funds from his Thrift Savings Plan — the federal government’s version of a 401(k) — to help fund a major remodel of our bathroom. It was a want, not a need. But saving over three decades can afford such a luxury.

We changed course. The home improvement will have to wait.

It didn’t have to be this way. The economy had been strong, recovering from high inflation and a near miss recession following a devastating pandemic. It felt like we could breathe.

However, here we are, 100 days into the second term of President Donald Trump, and those of us saving for retirement are wondering what the heck happened. (I’ve promised my husband to curb my cussing.)

Our 401(k)s are in negative territory for the year. My retirement portfolio was up by 3 percent in January. By February, it began to decline, dropping 2 percent. In March, a further 6 percent.

Unlike other downturns, such as the housing crisis and the pandemic, this is a self-inflicted slump. Trump’s trade war is dragging down the U.S. economy.

Only in 1973, when the S&P dropped 9.9 percent at the beginning of Richard M. Nixon’s second term, was there a tougher start for investors than Trump’s first 100 days in his second term, according to an analysis by Sam Stovall, chief investment strategist for CFRA Research.

For post-election years from 1944 through 2020, the S&P 500 rose an average of 2.1 percent in the first 100 days of a presidential term, according to Stovall.

How bad are things now? The S&P drop for Trump’s first 100 days was 7.3 percent.

“History would imply this could be a challenging full year,” Stovall said.

Other financial experts agree.

“The rough start to Trump’s second presidency, so far as share prices and the dollar is concerned, represents a remarkable shift in sentiment,” AJ Bell Investment Director Russ Mould noted in a report at the start of the week.

During a press call, Sen. Elizabeth Warren (D-Massachusetts) and former federal officials discussed the impact of Trump’s first 100 days on consumers and the stock market.

Trump, Warren said, “started the dumbest trade war in history, single-handedly crashing equity markets and sinking retirement accounts.”

Her assessment is not partisan hyperbole.

The Conference Board released its April report for the consumer confidence index on Tuesday. It showed that consumer confidence — across all ages and most income groups — took a nosedive this month, dropping to levels not seen since the pandemic. The index measuring consumers’ expectations fell 12.5 percentage points to 54.4, well below the threshold of 80 that usually signals a recession is coming, the board said.

There is “pervasive pessimism about the future,” reported Stephanie Guichard, the board’s senior economist for global indicators.

Stock market volatility in April pushed consumers’ views deeper into negative territory, with 48.5 percent expecting stock prices to decline over the next 12 months, Guichard said.

Meanwhile, the Groundwork Collaborative, a nonprofit, released a report at the 100-day mark projecting that Trump has put the country on the path to stagflation, when slow growth is accompanied by high inflation and unemployment.

According to the report, the economy Trump inherited — declining inflation, low unemployment, and strong economic growth — could have continued well into his second term with minimal maintenance.

Instead, “this is inflation by choice,” said Michael Negron, a policy fellow at Groundwork Collaborative.

It’s not just what’s happening to our retirement plans, said Rohit Chopra, former director of the Consumer Financial Protection Bureau, which Trump is trying to dismantle.

“It can be really easy to focus on what’s happening with the S&P and NASDAQ or the Dow,” said Chopra, speaking on a press call Tuesday. “But I think to really understand what is going on, and why I increasingly feel that we’re headed into a recession, is by taking a look at what happens in local economies.”

Fearing a recession, consumers are rightfully pulling back on their spending. The uncertainty is compounded by Trump’s on-again, off-again tariff policies, which increase investors’ anxieties, Stovall said.

On Tuesday, Trump signed an executive order retreating from some tariffs on imported car and car parts. But the tariff-war escalation has inflicted economic damage that will be hard to undo.

As the year plays out, I suggest you peek at your portfolio only when necessary.

Stovall said: “For individual investors, I would basically say, as Bette Davis said in [‘All About Eve’]: “Fasten your safety belts. It’s going to be a bumpy night.”

Or, in this life, a very rough ride until the next presidential election.