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AP Fact Check: Trump Hypes Stock Gains for the Less Wealthy

by Josh Boak .
Friday Jul 19, 2019
President Donald Trump speaks to the media as he arrives on Air Force One at Pitt Greenville Airport, in Greenville, N.C., Wednesday, July 17, 2019
President Donald Trump speaks to the media as he arrives on Air Force One at Pitt Greenville Airport, in Greenville, N.C., Wednesday, July 17, 2019  (Source:AP Photo/File)

President Donald Trump is misrepresenting the facts when he says the rising stock market has largely benefited working-class Americans.

Speaking at a Cabinet meeting, he suggested that his economic policies such as tax cuts have led to the biggest stock market gains for lower-income, blue-collar workers. That's a distortion of reality.

A look at the claim:

TRUMP: "I think a number that makes me the happiest is that, proportionately, the biggest gainer in this entire stock market — when you hear about how much has gone up — blue-collar workers, the biggest proportionate gainer." — remarks Tuesday.

THE FACTS: Wealthier Americans have largely benefited from the stock market gains, not blue-collar workers.

The problem with the president claiming the stock market has helped working-class Americans is that the richest 10% of the country controls 84% of stock market value, according to a Federal Reserve survey. Because they hold more stocks, wealthier Americans have inherently benefited more from the 19% gain in the Standard & Poor's index of 500 stocks so far this year. About half of U.S. families even hold stocks, so plenty of people are getting little to no benefit from the stock market gains.

The statement fits a pattern in which Trump portrays policies that have comparatively favored the wealthy as primarily helping the middle class.

For example, the president promised in 2017 that his tax cuts would be a "middle-class miracle." But much of the magic went to millionaires.

People earning more than $1 million received a combined total tax cut last year of $36 billion, or $64,428 per filer, according to the Joint Committee on Taxation. Those earning between $50,000 to $75,000 — a solidly middle-class income — got back a combined $22.4 billion, or $819 per filer.

What Trump may be claiming with regard to the stock market is that working Americans are disproportionately benefiting in their 401(k) retirement savings.

Trump has said that 401(k) plans are up more than 50%. His data source is vague; during the Cabinet meeting, the president said, "Somebody told me." But 401(k) balances have increased in large part due to routine contributions by workers and employers, not just stock market gains.

The Employee Benefit Research Institute shows that only one group of Americans has gotten an average annual 401(k) gain in excess of 50% during Trump's presidency. These are workers age 25 to 34 who have fewer than five years at their current employer. At that age, the gains largely came from the regular contributions instead of the stock market. And the percentage gains look large because the account levels are relatively small.

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AP Economics Writer Christopher Rugaber contributed to this report.

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