AP FACT CHECK: Trump in a stock market and budget tempest

Published 8:18 am Monday, February 12, 2018

WASHINGTON — The weeklong drama over the hourslong government shutdown set loose overblown rhetoric from both parties while President Donald Trump wrestled inartfully with turmoil in the stock market, one of his favorite bragging points until it tanked.

On the sidelines of the budget battle, Trump pitched his campaign against the MS-13 gang. He seemed to overstate the reach of the violent organization in his determination to link immigrants with criminal behavior and to justify money for a wall along the U.S.-Mexico border. Meantime his EPA chief misrepresented the science on global warming, some of it coming from his own agency.

A review of some statements by Trump and other public figures during a week of turbulence on multiple fronts:

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TRUMP: “We’re here to discuss the tremendous threat of MS-13, one of the most violent and vicious gangs anywhere in the world. We’ve really never seen anything quite like this.” — remarks Tuesday at a law enforcement meeting.

THE FACTS: The group is unquestionably violent but its overall numbers are somewhat limited. Federal prosecutors believe MS-13 now has thousands of members across the country, yet statistics show they account for less than 1 percent of total U.S. gang membership.

Formed in Los Angeles in the 1980s by El Salvador refugees and more recently expanded in Central America, the group is indeed linked to big number of homicides in certain parts of the U.S., including 25 killings on New York’s Long Island in the past two years. Even so, an FBI report put the group well behind other gangs for crimes on the southwest border — seventh of 12 —  with the Surenos, Barrio Azteca and Tango Blast ranked in the top three.

Despite Trump’s contention that “MS-13 recruits through our broken immigration system, violating our borders, and it just comes right through,” the gang has many U.S.-born members at this point — people who by virtue of U.S. citizenship can’t be denied entry based on their nationality, or deported. The government has not said recently how many members it thinks are citizens and immigrants. In notable raids on MS-13 in 2015 and 2016, most of the people caught were found to be U.S. citizens.

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TRUMP: “In the ‘old days,’ when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!” — tweet Wednesday.

THE FACTS: It’s not that simple, and it’s not true that a positive economic indicator necessarily means a rise in stocks. The opposite can happen, depending on what sort of chain reaction is anticipated by investors.

The market dive was prompted in part by the news that wages are rising at the best pace in eight years after a prolonged bout of sluggish gains. Higher wages can lead to more inflation. The Federal Reserve could try to restrain inflation by raising interest rates, which would hurt corporate profits and limit the pace of economic growth. That’s how good news for workers can come with a downside for investors.

Likewise, bad news can make the market rise. In 2016, for example, the Labor Department initially reported that employers added a mere 38,000 jobs in May. After slipping that day, the Dow Jones industrial average climbed the next trading day. A weak jobs report can cause stocks to dip briefly, then surge the following days on the belief that the Fed will hold off on rate increases.