Finance

Trump’s Stock Market Returns 36 Months Into Presidency Tie Clinton’s At Equivalent Stage, Lag Obama’s By 13 Points

Donald Trump and the stock market.

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Stock market returns are not the best measuring stick of a president’s performance in office, as I’ve written about before. A president has a limited amount of control over what the stock market does. Only about half of Americans even own stocks. And the richest 10 percent of Americans own 84 percent of the stocks, so when the stock market does well, it’s mostly only directly helping a small group of already rich people.

But Donald Trump has actually done an excellent job, among his fans at least, of tying perceptions of his job performance to a rising stock market. This is a good marketing move, because the stock market, even under a bad president, is supposed to rise. Over the past century or so, looking at the past 15 presidents, stock market returns have been negative over the tenures of only three heads of state (Herbert Hoover, Richard Nixon, and George W. Bush –- all Republicans, for what it’s worth). If your argument is, “If the stock market’s doing well, I’m doing well,” historically you have an 80 percent chance of that panning out for you.

Betting that the stock market is going to rise over the long term is a bit like betting that the overall global temperature is going to rise. It’ll probably happen regardless of what a president does or does not do. So, the debate becomes one of degree, and people are bad at nuance.

Yes, the stock market has risen under Trump, just like it did during the terms of 12 of the past 15 presidents. Yes, new record highs were reached for various stock indexes during Trump’s tenure. Stock indexes reaching records is not unusual. It’s what is supposed to happen.

Still, the stock market hasn’t crashed under Trump (yet), and clearing even a low bar is worth something. By modern standards, he’s even doing above average, at least as measured by the S&P 500, which tracks the stocks of 500 large companies listed on U.S. stock exchanges.

To measure stock market performance, you have to pick an index, which is itself a relatively convoluted process. Until recently, there have not been indexes which granularly track total stock market performance. But indexes that have been around for a while, like the S&P 500, can be used as a rough proxy for the stock market as a whole.

Donald Trump was inaugurated on January 20, 2017, so the end of last week marks the last day of trading exactly 36 months into his presidency. At three years into his own presidency, Bill Clinton had seen the S&P 500 rise by 45 percent. Midweek last week, Trump tied those returns, and then ended the week slightly surpassing them, at 46.1 percent. Neither Clinton nor Trump hold a candle to the S&P 500 returns ushered in by Barack Obama though: he oversaw a 58.9 percent return by 36 months into his presidency. George W. Bush notched an embarrassing -17.2 percent loss in the S&P 500 over his first three years, putting the average returns for the last four presidents at 33.2 percent after three years in office.

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The index you use for comparison does matter though. The Dow Jones Industrial Average comprises 30 large public companies specifically selected to represent the broader economy. Viewing stock market returns through the lens of the Dow, 36 months in, Trump, Obama, Bush II, and Clinton scored 47.7 percent, 57.9 percent, -3.7 percent, and 63 percent, respectively.

Whatever measure you pick of stock market performance, things are going reasonably well under Trump, but it’s nothing to write home about either. Both of the last Democratic presidents did as well or better than Trump at juicing the stock market three years in. And Trump’s January 9 tweet about the stock market is self-promotion divorced from reality regardless of how you look at it:

STOCK MARKET AT ALL-TIME HIGH! HOW ARE YOUR 409K’S DOING? 70%, 80%, 90% up? Only 50% up! What are you doing wrong?

Nope, it’s not a 409K (he later corrected that part), and if you’re matching or even marginally beating the broader market, your 401(k) has realized not quite 50 percent returns under Trump. Your 401(k) certainly has not gone up 70, 80, or 90 percent during the Trump presidency. So, credit where credit is due: Trump has had good, even above average stock market returns during his tenure. His stock market returns have not been as good as Obama’s though, and they are nowhere near what he’s trying to take credit for.

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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 jon_wolf@hotmail.com.

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