With the 2012 Presidential Campaign now in full swing, I thought it would be interesting to observe prior performance of the stock market under the different presidential administrations from Jimmy Carter to Barack Obama.
The charts below all begin and end on January 20th as the starting and ending day of a presidential term for comparison purposes.
Each chart plots the S&P 500 Index activity throughout each term.
Charts are presented without commentary and without any sort of bias.
Be sure to read the brief caveats at the end of the post:
Jimmy Carter: 1977 – 1981
[Related -Increased Volatility Could Flip The Switch On Complacency.]
Ronald Reagan (1st): 1981 – 1985
Ronald Reagan (2nd): 1985 – 1989
George H. W. Bush: 1989 – 1993
[Related -A New Era For Fed Policy… And Inflation?]
William "Bill" Clinton (1st): 1993 – 1997
William "Bill" Clinton (2nd): 1997 – 2001
George W. Bush (1st): 2001 – 2005
George W. Bush (2nd): 2005 – 2009
Barack Obama (5 months remain): 2009 – 2013
Composite S&P 500 Percentage Performance (by term):
- No president can implement all the policies he wishes.
- Administrations are constrained by Congress (House and Senate), Lobbyists/Interest Groups, Public Opinion, and finally the Supreme Court.
- Many presidents have encountered "Divided Government," where the Congress is controlled by the opposition party (Reagan, Clinton, and Obama, for example).
- Events always occur that are out of any president's control. The economy is also not directly controlled by government.
- Policies that help or hurt the free market economy include tax policies (rates), regulatory policies, and federal budgetary policies/investment (to name a few).
- Policies implemented may take months or even years to affect the economy.
- A better method for assessing stock market and presidential performance may be to start the comparisons after the first full year of a new administration (with the exception being the re-election of incumbent presidents).
- The policies of the independent Federal Reserve (interest rates, stimulus) greatly effect the broader economy.
Despite the numerous caveats for extrapolation, it's interesting to observe how the stock market has performed over specific administrations, particularly with respect to major events (1987's crash, the late 1990's tech bubble, the early 2000's tech crash, the September 11, 2011 terrorist attacks, the 2008 crash).
The most interesting observation I had is that the stock market has such a bullish 4-year performance over all administrations, save for 2001 – 2009 (two recessions that occurred like book-ends to the decade).
As the campaign continues into the November 2012 election, it's interesting to learn about stock performance under prior administrations and policies.
Corey Rosenbloom, CMT
Afraid to Trade.com