Even before Donald Trump's inauguration, he had already accomplished something that bedeviled his predecessor, President Barack Obama, for eight years: awakening the economy's "animal spirits."
A range of economic gauges climbed, from business and consumer confidence to the financial markets, as optimism surged, particularly among Republicans. The momentum was propelled by Mr. Trump's campaign promises, including repealing and replacing Mr. Obama's health care law, overhauling the corporate tax code, rolling back regulations and jolting the economy with $1 trillion in infrastructure spending.
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As his first 100 days in office draw to a close, that energy stands as Mr. Trump's main economic accomplishment. Though he has dialed back some regulations by executive order, many of the economic-policy pledges have yet to be fulfilled.
"In the meantime, the only engine for growth is going to be the private sector and its confidence in the new management team," said Bill Dunkelberg, chief economist at the National Federation of Independent Business. Going forward, "Legislative progress is essential."
For over 40 years, the NFIB has surveyed small businesses to measure their economic optimism. The postelection surge propelled its index to levels seen only twice before: for a stretch in 2004, after President George W. Bush enacted his second large tax cut package, and in 1983 and 1984, the era that President Ronald Reagan had proclaimed "Morning in America."
But those upswings came after major legislative victories. Today's economic acceleration came before Mr. Trump even took office, leaving open the question of whether it can be sustained.
Scott Anderson, chief economist of the Bank of the West, describes the sentiment surge as "blind hope that policy changes put forward by the new administration will shake up the unsatisfactory status quo."
The question many observers ask is whether the optimism marks the beginning of a new era for the U.S. economy, or whether it will prove a fleeting moment of false promise.
Mr. Trump had vowed in his first 100 days to fight for the passage of 10 broad legislative measures, including the repeal of the health law, the infrastructure package, middle-class tax relief, lower corporate tax rates and new child-care and elder-care tax deductions.
None of the 10 has passed Congress.
The first attempt to rewrite the health law failed in Congress, sunk by intraparty disagreement among Republicans that meant the bill never even reached the House floor for a vote.
The fate of tax reform is uncertain -- the Republican party appears deeply divided over whether to offset cuts in tax rates with proposals that could be unpopular, such as taxing imports and exempting exports.
Mr. Trump proposed cutting the corporate tax rate to 15%, and lowering personal rates as well, while also eliminating deductions for state and local taxes. The proposal faces a challenging road through Congress, where the plan likely would require at least some Democrats to back it.
The infrastructure plan faces hurdles, too -- how much to increase U.S. deficits to fund the investments. And Mr. Trump's proposal to ramp up military spending needs a funding mechanism.
"Clearly, President Trump is taking a page right out of President Reagan's playbook, talking about tax reform, less government regulation, military spending," said KC Mathews, the chief investment officer of UMB Bank in Kansas City. "But can you use the same policy in a different part of the [economic] cycle and expect the same efficacy?"
When Mr. Reagan took office, taxes were much higher, leaving more room to cut. The national debt was much lower, meaning there was perhaps more willingness from Congress to increase government borrowing. The nation was far less polarized, too, meaning it was easier for representatives and senators of different parties to come together in legislative majorities.
Mr. Reagan would later preside over large declines in inflation, which positioned the Federal Reserve to begin a campaign of highly stimulative interest rate cuts, adding further fuel to growth. This time, inflation and interest rates are low from the get-go, meaning little prospect of added economic juice, and the Fed has embarked on gradually raising rates.
For now, the optimism largely remains.
The Dow Jones Industrial Average sat below 18000 the week before the presidential election. It soared after the election, crossing the 19000 threshold before the end of November, and climbing above 20000 a few days after the inauguration.
On March 1, the index closed above 21000 for the first time and remains near that level today. U.S. households collectively owned corporate equities valued at around $25 trillion last year, so the 16% increase since the election amounts on paper to between $3 trillion and $4 trillion in new wealth. If it endures, it is a meaningful increase, regardless of what happens legislatively.
But many traditional economic indicators have yet to show much movement. The pace of job growth has been little different than under President Obama. Retail sales dipped in February and March. Economic growth for the first quarter is widely estimated to have been weak.
While the large accomplishments promised on the campaign trail have remained elusive, the president has taken smaller steps to chip away at regulations that many in the business community had found counterproductive.
Mr. Trump and his allies in Congress have used a previously obscure law -- the Congressional Review Act -- which allows a simple majority in Congress to pass laws overturning recently passed regulations. Mr. Trump signed bills that undid regulations on the coal industry, government contracting and drug testing that were implemented late in Mr. Obama's tenure.
Mr. Trump also signed orders approving the Keystone XL pipeline and expediting environmental review for energy and infrastructure projects.
"Already, we have seen the new administration make pro-business moves, particularly regarding regulations, that have helped to keep sentiment elevated," said Chad Moutray, chief economist at the National Association of Manufacturers.
Others say that just because major economic policy changes didn't arrive as promised, they could still be around the corner.
"The logic would dictate that Republicans want something to take to their voters in 2018," said Gus Faucher, chief economist of PNC Bank in Pittsburgh. "That argues for tax cuts and infrastructure in 2018."
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
April 27, 2017 05:44 ET (09:44 GMT)