Former U.S. Treasury Secretary Robert Rubin has issued a warning: repeated stock market highs do not signify a healthy economy. A series of policies from the Trump administration are accumulating deep-seated damage, the consequences of which may be released in a delayed but severe manner. Rubin, in a bylined article for the Financial Times, noted that the S&P 500 has risen over 7.3% since the outbreak of the Iran war, with about 85% of its constituent companies exceeding first-quarter earnings expectations, and analysts have recently raised profit forecasts. However, he argues that these surface-level figures mask serious economic damage accumulating at the policy level—from worsening fiscal deficits and tariff impacts to the erosion of Federal Reserve independence and cuts to research funding—impacts not yet fully reflected in short-term data. Rubin warns that the disconnect between markets and reality can persist for a considerable time before a sharp reaction occurs. Citing the 22% single-day plunge of the Dow Jones in 1987 and the Greek sovereign debt crisis as examples, he cautions investors that a sudden collapse often follows a period of calm. He urges the public not to be lulled by a seemingly strong stock market and relatively robust economic data, because the cost of correction once the market reacts to the damage already inflicted will be far higher than it is now.
Behind the stock market highs, policy damage has not yet been booked
Rubin acknowledges the impressive current market data but explicitly states this does not prove the Trump administration's policies have not caused serious harm. He points out the problem lies in the lag of the damage. The current market and economy seem to have developed an "immunity" to policy chaos, leading some to conclude that Trump's policies have not brought the severe consequences anticipated. Rubin directly refutes this: "I disagree with that assessment. I believe the economy has already suffered significant damage, the effects of which will manifest gradually in the future." He cites historical cases for support: in the 18 months before October 1987, the stock market continued to surge despite underlying risk concerns, followed by the Dow Jones Industrial Average plunging 22% in a single day; before the European debt crisis, the spread between Greek sovereign bonds and other eurozone countries remained at extremely low levels for a long time, despite early concerns about its fiscal and economic problems, until the debt suddenly collapsed.
Old problems worsen, new risks emerge
Rubin categorizes policy risks into two types: those that exacerbate existing problems and those that create entirely new hazards. Regarding the former, he highlights fiscal issues: the government, which should have repaired an unsound fiscal trajectory, instead implemented a tax cut plan financed by trillions of dollars in deficits; the high-cost, low-efficiency healthcare system remains unreformed; and while artificial intelligence drives rising electricity demand, the government has cut support for cheap alternative energy sources. He believes these choices will push up prices, suppress growth, and weaken economic resilience. Regarding the latter, Rubin lists a series of measures he considers newly introduced risks: politicizing the Federal Reserve, targeting universities, significantly slashing federal research funding, cracking down on undocumented immigrants who play key roles in construction and agriculture, restricting legal immigration, and imposing tariffs that raise prices and hinder growth. He also criticizes the "slash-and-burn" approach of the Department of Government Efficiency (DoGE), stating it has severely damaged government functions.
"Turning back" is difficult to offset persistent damage
Rubin observes that the market is currently partially reassured because extreme policies often get halted eventually—the Iran ceasefire, the Justice Department dropping its investigation into Fed Chair Powell, and the administration accepting the Supreme Court's ruling that most of its tariffs were illegal. But he emphasizes this comfort mechanism has limitations: "Chaos and uncertainty erode the economy over time." Policy reversals themselves constitute persistent damage, not a cost-free repair. In his view, a deeper hidden danger lies in the shaking of U.S. international credibility—belittling NATO allies, seeking ownership of Greenland, waging war on Iran without clear objectives, punishing dissent, and undermining the rule of law. "The rule of law is the foundational support of the U.S. economy and a key competitive advantage," he writes, "and this advantage is being eroded."
Rubin: U.S. remains the most attractive investment destination, but vigilance against complacency is needed
Rubin clearly states at the end of his article that he does not intend to be pessimistic: "Given its immense strengths, the United States should still remain the world's most attractive market for investment." But he pivots: precisely because of this, investors and the public need to be more vigilant against being lulled by surface prosperity. He points out that by the time the market and economic data truly react to the damage already caused, the difficulty of getting the economy back on track will far exceed what it is today. Rubin uses this to call on voters to take action—supporting fair, free elections and candidates who, whether conservative or progressive, genuinely take economic challenges seriously, "including those we have created through our own recent policies."
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