Well, the stock market has had a rough few weeks. We are likely only days away from complete economic ruination, roving bands of blood-smeared cannibals descending as we huddle next to bonfires of worthless greenbacks, desperate for only a few last fleeting moments of warmth before the eternal cold and dark washes over us.
Fine, it’s not that dramatic. I have been a little cranky though looking at my mutual funds the last few days. It’s always nice seeing the arrow pointing up on the graph of your modest theoretical fortune, creating a little mountain for you to perch upon. Hello down there!
Except now we’re in the makings of a nasty little valley. There are probably a lot of edible but untasty lichens down here, and serious drainage problems. Nobody likes it.
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No worries, though. Our feckless fearless leader can be counted on to take full responsibility for the current slump. Any moment now… only a matter of time….
A time lapse of a person waiting for Donald Trump to finally accept responsibility for even one negative news item would look like Donovan drinking from the false grail in Indiana Jones and the Last Crusade. Trump has no problem taking credit when things are good, though. From his election up until February of this year, Donald Trump tweeted to boast about the stock market at least 60 times. He unabashedly took credit for its rise and claimed a direct causal relationship between that rise and his policies. But then in February, the S&P 500 and the Dow Jones Industrial Average had their worst percentage declines since 2011. Trump fell comparatively silent on the stock market. Bloomberg just compiled a handy little chart of some of Trump’s highlight tweets in relation to the state of the stock market, which is worth taking a peek at.
Stocks made up the ground lost in February, and then some, until October hit. As of Friday’s market close, the Dow dropped 6.7 percent in October, the S&P 500 8.8 percent, and the Nasdaq 10.9 percent. That put the Dow and S&P 500 negative for the year (-.01 percent and -0.6 percent, respectively), and the Nasdaq up only an anemic 3.8 percent for 2018. For a hot minute there it looked like Monday might turn the momentum around, but then stocks ended in the red yet again. Stock prices crept up on Tuesday, after Trump’s Tuesday tweet containing the sentence, “If you want your Stocks [sic] to go down, I strongly suggest voting Democrat.”
Looking at stock prices is kind of a horrible way to measure a president’s job performance for a few reasons. For one thing, a president has some control over the policies that might impact the value of stocks, but it’s a tenuous relationship at best, and the influence a president has can easily be overwhelmed by macroeconomic trends, either good or bad. Also, you have probably heard that roughly half of Americans don’t own any stocks. That’s true, although I have even worse news for you: the richest 10 percent of Americans own around 84 percent of all stocks. When the stock market goes up, half of us don’t see any benefit, and most of the rest of us are only getting peanuts compared to, well, the Mr. Peanuts of the world.
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So, while the stock market can serve as a rough proxy for the state of the economy, judging a president by stock market performance doesn’t make all that much sense. Let’s do it anyway though. From taking office to the point Trump is at in his presidency as of this writing, the modern presidents saw the stock market, as measured by the Dow Jones Industrial Average, do this:
Obama +39 percent
Trump +24.5 percent
Clinton +18.1 percent
Reagan +4.7 percent
GHW Bush +4.3 percent
GW Bush -22.9 percent
The modern past presidents all ended their terms much higher, except for poor GW Bush, who crash-landed after eight years at minus 26.5 percent. The absolute front-runner after eight years was Clinton, who oversaw a 228.9 percent rise. Obama came in second in the modern era with respectable gains of 148.3 percent over eight years, with The Gipper hot on his heels at a positive 147.3 percent. Clinton’s stock market gains were pretty impressive. He even beat FDR, who after 145 months in office finally dropped dead, probably from exhaustion brought on by saving the whole damn world from the Nazis while simultaneously ushering in a 198.6 percent gain in stocks.
What all of this goes to show, beyond the unsurprising fact that Donald Trump tweeted something dumb, is that it is far too early in the Trump presidency to make any meaningful assessments about his ultimate effect on the stock market. Where the stock market is at this point in the Trump presidency is fine. It is certainly not historic or unprecedented or meaningfully impactful on where the stock market will be at the end of his term. Trump shouldn’t be taking credit every time he sees the little numbers scrolling at the bottom of the screen on Fox News turn green, at least not if he’s going to fail to take the blame for months like this last one.
If you’re one of the plebeians like me who owns some of that remaining 16 percent of stocks the rich have left for us, keep calm and carry on. It’s hard to see your meager fortune melting away over a few days, but it will come back. And when your discipline finally pays off, unlike the president, you can legitimately take full credit.
Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].