President Donald Trump hardly ever resists the urge to congratulate himself for single-handedly catalyzing a stock market boom, the likes of which Wall Street has never seen.
Last month, for instance, he concluded a tweet touting the Dow Jones Industrial Average’s historic June rally with the following statement: “Thank you Mr. President!”
But there’s a dirty little secret Trump doesn’t want you to know about: The stock market actually fared better under former President Barack Obama.
Obama Stock Market Leaves ‘Trump Bump’ in Its Dust
That’s according to Bill McBride, author of the Calculated Risk blog, who published a chart comparing the performance of the S&P 500 during the Obama and Trump administrations.
At this point in Trump’s presidency, the S&P 500 has surged 31%. That’s an impressive run, but it pales in comparison to the parabolic 63% climb the index had already enjoyed by this point in Obama’s first term.
Still, the Trump and Obama stock markets could soon converge – at least temporarily – if the all-but-assured Federal Reserve interest rate cut gives the S&P 500 the boost many analysts expect. But, barring an extreme divergence from cyclical market trends, it’s unlikely Trump’s stock market will outperform Obama’s heading into the 2020 election.
Yes, There’s a Catch
Of course, comparing the stock market’s performance under different presidential administrations might be even less worthwhile than comparing apples and oranges, as MarketWatch notes in its light-hearted write-up of McBride’s blog post.
For example: President Obama assumed office at the tail-end of a brutal equities sell-off, while Trump entered the White House with stocks nearly a decade into a bull market.
Consequently, McBride doesn’t draw any conclusions from his chart, and he doesn’t think that you should, either. However, as he notes, that’s precisely what people will do anyway since it’s so tempting to boil down complex financial market forces into a simple cause-and-effect formula.
In fact, he cites Trump advisor Larry Kudlow, who wrote more than a decade ago that stock market performance is the “best barometer” of a country’s health – and a direct reflection on the president.
“I have long believed that stock markets are the best barometer of the health, wealth and security of a nation,” Kudlow wrote during the George W. Bush administration. “And today’s stock market message is an unmistakable vote of confidence for the president.”
Notably, Kudlow wrote that line in 2007 – just prior to the financial crisis and Great Recession. So perhaps stock markets aren’t the best barometer of the “health…of a nation” after all.