The Best Presidents for the Stock Market

I think the president has less influence over the economy than most people think. We'll always have recessions and bear markets, booms and bubbles, no matter who is in office. One of my favorite political quotes comes from bank lobbyist Andrew Lowenthal: "Every election I've ever been involved with has been 'the most important election in history,'" he says. "At some point, it's not. It's just the path of history."

But people always need someone to blame, or thank, for the economy, and the person occupying the White House is a natural target. As long as that's the case, the hard facts about how the economy and markets have performed under different presidents are important. 

By popular demand, here's an updated chart of the S&P 500 (and its historical equivalent) adjusted for both inflation and dividends. These are average annual returns, so whether a president served one or two terms doesn't skew the results: 

Rather than the president, I think a more meaningful (and shocking) figure comes from the Federal Reserve: Since 1994, nearly all of the stock market's gains have come within 24 hours of FOMC policy announcements. 

Last year I looked at GDP growth, inflation, unemployment, and corporate profits under past presidents. You can see those here

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  • Report this Comment On December 03, 2013, at 7:10 PM, MartyTheCanuck wrote:

    Morgan

    Don't you think that the years FOLLOWING the presidency has a better correlation to the job done by the president ( and congress ). If you put some reforms in place to improve education, employment, free trade, productivity, the country will reap the benefits over a long time, much longer than the few years you have left in office.

    And if a president is somewhat responsible of the economy during his reign, he has nothing to do with the level of the stock market when he is sworn in. Bush became president during the biggest bubble. That didn't help his record. And if Obama became president a few months earlier, he wouldn't have been responsible for the immediate plunge in the market in the following months.

  • Report this Comment On December 03, 2013, at 8:45 PM, TheAxeMan wrote:

    @Marty: It doesn't sound like Morgan sees much connection at all between the president's job performance and long term stock market returns. But you have a good idea, it might be interesting to massage the data and see how the correlations change. For example, use a TTM average and/or offset by a year or so.

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