While looking at one of the charts I had created in the past, US Stock Market Index SP500 since 1927, here shown on a log scale and with linear trend line, I’ve asked myself, what impact a US presidency and the party might have.
There are rather too many variables for any president to be reasonably given credit or otherwise for stockmarket performance during their tenures. It’s very easy for a president to be unjustly blamed for the past and matters outside their control. It’s also very easy for a president to claim responsibility for performance to which they may have contributed almost nothing.
As you acknowledge, what happened prior to inauguration is more than a little significant, and the starting point is needed for context. Biden inherited markets under a Covid malaise - the only way was up, especially given the unprecedented money creation which, unlike during the years of Quantitative Easing, did not remain within the banking/shadow banking sector, but spread into the mainstream economy.
Actions of the Federal Reserve to flood or drain markets of liquidity is another essential consideration - it makes a big difference to expectations. Recessionary periods can blight a presidency for sentiment and market performance, but they are seldom identifiable with a president’s specific economic policies. Policies are often enacted to combat recessions, but seldom if ever to prevent them.
Clinton inherited an economy just emerging from the recession of the early 90s - the state of the economy in 1992 contributed substantially to his election victory over Bush I. Then, during the Clinton presidency the markets benefited from some extraordinary macro events that can hardly be attributed to Clinton’s economic policies - or at least not to those policies alone - the ending of the Cold War, the emergence of China as a major trading player, the first flushes of largely-unregulated globalism, and the impacts of various new technologies. These conditions - with far more weight behind them than just Clinton’s Administration - kept money relatively cheap and loose during the 90s, which benefited stockmarket returns.
Clinton is, however, seldom held accountable for the crash of 2008, yet many of the conditions that led to the crisis of 2008 had their origins in Clinton’s market deregulation policies. How should these lagging effects be assessed? and how should ‘unmerited virtue’ be excluded? And who should decide? To develop a method by which a president’s term might be more fairly assessed for its specific effects on markets would seem to be an enormously complex task of econometrics, with more than enough subjectivity to make the whole exercise unlikely to be accepted by anyone!
It’s also worth saying that the condition of the real, productive economy is rather more important to a nation in the longer term (and much less fickle) than ephemeral market sentiment.
>>>>>There are rather too many variables for any president to be reasonably given credit or otherwise for stockmarket performance during their tenures.<<<<
The variables were disposed of during the Reagan Administration . See my previous post .
A long time ago I stopped looking to blame or give credit of the economy to the president. It seems clear the economy has to do with variables larger than the president, with cause and effect lags of policy too long to even give credit or blame where it belongs. I wanted to believe the new deal was the answer to the depression but honestly WWII and us coming away as a mostly unscathed, industrialized super power were probably larger factors. The stagflation of the 70s seems like it was a hiccup in oil supply combined with peak consumption of baby boomers starting families than whatever Nixon or Carter were doing. So forth and so on.
The Reagan Administration used EO 12631 to create the Plunge Protection Team - whenever things get hectic the Federal Reseve Board props up the stock market in order to prevent a crash , Ain't that some Shih-Tsu?
There are rather too many variables for any president to be reasonably given credit or otherwise for stockmarket performance during their tenures. It’s very easy for a president to be unjustly blamed for the past and matters outside their control. It’s also very easy for a president to claim responsibility for performance to which they may have contributed almost nothing.
As you acknowledge, what happened prior to inauguration is more than a little significant, and the starting point is needed for context. Biden inherited markets under a Covid malaise - the only way was up, especially given the unprecedented money creation which, unlike during the years of Quantitative Easing, did not remain within the banking/shadow banking sector, but spread into the mainstream economy.
Actions of the Federal Reserve to flood or drain markets of liquidity is another essential consideration - it makes a big difference to expectations. Recessionary periods can blight a presidency for sentiment and market performance, but they are seldom identifiable with a president’s specific economic policies. Policies are often enacted to combat recessions, but seldom if ever to prevent them.
Clinton inherited an economy just emerging from the recession of the early 90s - the state of the economy in 1992 contributed substantially to his election victory over Bush I. Then, during the Clinton presidency the markets benefited from some extraordinary macro events that can hardly be attributed to Clinton’s economic policies - or at least not to those policies alone - the ending of the Cold War, the emergence of China as a major trading player, the first flushes of largely-unregulated globalism, and the impacts of various new technologies. These conditions - with far more weight behind them than just Clinton’s Administration - kept money relatively cheap and loose during the 90s, which benefited stockmarket returns.
Clinton is, however, seldom held accountable for the crash of 2008, yet many of the conditions that led to the crisis of 2008 had their origins in Clinton’s market deregulation policies. How should these lagging effects be assessed? and how should ‘unmerited virtue’ be excluded? And who should decide? To develop a method by which a president’s term might be more fairly assessed for its specific effects on markets would seem to be an enormously complex task of econometrics, with more than enough subjectivity to make the whole exercise unlikely to be accepted by anyone!
It’s also worth saying that the condition of the real, productive economy is rather more important to a nation in the longer term (and much less fickle) than ephemeral market sentiment.
>>>>>There are rather too many variables for any president to be reasonably given credit or otherwise for stockmarket performance during their tenures.<<<<
The variables were disposed of during the Reagan Administration . See my previous post .
A long time ago I stopped looking to blame or give credit of the economy to the president. It seems clear the economy has to do with variables larger than the president, with cause and effect lags of policy too long to even give credit or blame where it belongs. I wanted to believe the new deal was the answer to the depression but honestly WWII and us coming away as a mostly unscathed, industrialized super power were probably larger factors. The stagflation of the 70s seems like it was a hiccup in oil supply combined with peak consumption of baby boomers starting families than whatever Nixon or Carter were doing. So forth and so on.
Now the bad news
The Reagan Administration used EO 12631 to create the Plunge Protection Team - whenever things get hectic the Federal Reseve Board props up the stock market in order to prevent a crash , Ain't that some Shih-Tsu?
https://www.lewrockwell.com/2006/10/peter-stojan/gasoline-price-manipulation-before-theelections/