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Like no president before him, Donald Trump has used the stock market as a dashboard, arguing that large gains were a justification for his economic management.
Trump is leaving office with major American credentials near the all-time highs. But how does its performance compare to that of its predecessors?
Not too bad, according to the main clues. Based on the annualized returns of the S&P 500 SPX,
The US benchmark, Trump (+ 13.7%) saw the third best performance of the 15 presidents in office since 1929, according to Dow Jones Market Data. Trump, however, slightly followed his immediate predecessor, Barack Obama (+ 13.8%). Bill Clinton (+ 15.2%) claims first place.
Dow Jones Market Data
The Dow Jones Industrial Average DJIA,
the best-known prime gauge posted an annualized return of nearly 11.8% under Trump, compared to 12.1% for Obama and 15.9% for Clinton. Calvin Coolidge, with the advantage of the Roaring Twenties, overtook them all with an annualized increase of 25.5%, based on data going back to the late 1890s.
Trump can claim some bragging rights with respect to the highly technological Nasdaq Composite, which debuted in the early 1970s. A 24.2% annualized rise tops the list, with Jimmy Carter coming in second with a gain of 19.6%.
Of course, there are reasons past presidents have been reluctant to tie their success too closely to the stock market. On the one hand, the market is unstable. If you take credit for her rise, you will probably only be blamed if she falls.
The stock market is also a far from perfect indicator of the economy or how individual households feel about their own situation.
So what should investors read on the historical record? After all, many analysts have noted that no Democratic president has seen a drop in total returns during his tenure.
Opinion: The economy – and the stock market – tends to do better under Democrats
Jim Reid, strategist at Deutsche Bank, argued that this might not offer much guidance either way when it comes to Biden’s presidency.
The question boils down to whether performance during Democratic administrations was due to proficiency in managing the economy or simply bad luck when it came to timing for some Republicans.
“For example, the United States had a Republican administration when the pandemic hit last year, the period between the peak of the dot-com bubble and the trough of the Great Financial Crisis (GFC) (George W. Bush.), When the 1973 oil shock happened (Nixon), and during the Depression (Hoover), ”Reid wrote.
Biden, meanwhile, inherits an economy that still struggles to recover from the COVID-19 pandemic and a stock market that many investors consider to be perfect if not in bubble territory. Stocks have rallied, however, since Biden’s election victory in November, in part due to expectations that he will impose aggressive stimulus measures.
And the new presidential term has started off on a high note, as the Dow, S&P 500 and Nasdaq all finished at record highs and recorded the best performance on inauguration day since Ronald Reagan was sworn in to begin his second. mandate in 1985.
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