Update: For Fun, Stock Market as Barometer of Policy Success
By request, here is an update to the chart showing market performance under Presidents Trump and Obama.
Note: I don’t think the stock market is a great measure of policy performance, but some people do – and I’m having a little fun with them.
There are some observers who think the stock market is the key barometer of policy success. My view is there are many measures of success – and that the economy needs to work well for a majority of the people – not just stock investors.
However, for example, Treasury Secretary Steven Mnuchin was on CNBC on Feb 22, 2017, and was asked if the stock market rally was a vote of confidence in the new administration, he replied: “Absolutely, this is a mark-to-market business, and you see what the market thinks.”
And Larry Kudlow wrote in 2007: A Stock Market Vote of Confidence for Bush: “I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today’s stock market message is an unmistakable vote of confidence for the president.”
Note: Kudlow’s comments were made a few months before the market started selling off in the Great Recession. For more on Kudlow, see: Larry Kudlow is usually wrong
Update: And from White House chief economic advisor Gary Cohn on December 20, 2017:
“I think there is a lot more momentum in the stock market. … “The stock market is reflecting the reality of what’s going in the business environment today,” said Cohn, director of the National Economic Council. “There is going to be a continuation [of the] rally in the equity markets based on real underlying fundamentals of the U.S. economy … as well as companies having more earnings power because of lower tax rates.”
For fun, here is a graph comparing S&P500 returns (ex-dividends) under Presidents Trump and Obama:
Click on graph for larger image.
Blue is for Mr. Obama, Orange is for Mr. Trump.
At this point, the S&P500 is up 21.3% under Mr. Trump – compared to up 36.0% under Mr. Obama for the same number of market days.