The New York Stock Exchange went into the Christmas break in its biggest market retreat in a decade, down about 20 per cent in three months. If it recovers some ground after reopening, that will be welcome but it remains to be seen when the volatility will end. This raises the question: what is there not to like in a domestic economy enjoying a low in unemployment, strong consumer sentiment after buoyant Christmas shopping sales and robust business expansion going by surveys of business supply managers?

Yet the stock market reflects gloom about prospects for next year, rather than the fundamentals on the ground now, especially about the American economy. It cannot be fully explained by the United States-China trade war, now in an uneasy truce after months of tit-for-tat measures; or the partial US government shutdown over President Donald Trump’s demands for funds to wall off Mexico, or by global uncertainty including potential crises in some major economies, such as Britain in the event of a no-deal Brexit. The US economy has proved resilient in the recent past to external shocks such as European debt crises, and threatened government shutdowns over debt ceilings.

And it is not reflected across financial markets, with the bond market suggesting slower growth not unlike what the US has been accustomed to in recent years. If the explanation cannot be found in facts on the ground or a well-founded fear of external shocks, attention turns sooner or later to the unconventional leadership of Trump. Assuming 2019 poses new challenges, Trump is more likely to be called on to exercise economic management. It remains to be seen whether his style of leadership is capable of preventing setbacks from becoming crises, amid evidence of uncertainty and lack of trust among trade partners and allies.

A recent disturbing example of Trump’s style is his attack on the independence of the US Federal Reserve over his disagreement with its interest rate policy, including reported discussion of a move to dismiss chairman Jerome Powell. The Fed’s independence is seen as key to maintaining the investor confidence and market stability. At the same time, according to the government, Treasury Secretary Steve Mnuchin called bank CEOs to seek assurances about liquidity to support businesses and individuals, which is hardly calculated to instil confidence even if there was no reason for concern.