The stock market has boomed since Donald Trump’s election with the exception of a drop on February 3. During his presidency the Dow Jones even broke the 25,000 mark for the first time ever. No one has been more thrilled about this growth than Donald Trump himself. President Trump has tweeted about the stock market 60 times since November 2016 and routinely speaks about his hand in the growth. Time and time again, he has claimed credit and responsibility for the bullish stock market. This is not an argument Democrats are fond of.
In response, Democrats have pointed to President Obama’s policies and stalwart leadership through the Great Recession as the cause for the boom in the stock market. When Trump touted the lowest Black unemployment rate in years, Democrats responded by pointing out the long term decline in Black unemployment started under Obama. Democrats want Obama to get the credit for the stock market and for Trump to receive the blame while Republicans hope for the opposite. So this begs the question, is the president responsible for the stock market? Is the inherent fact of growth or decline surpassing under an administration enough to warrant praise or blame?
Donald Trump’s triumphant stock market rise faced a roadblock on February 3, 2018 with massive sell offs in US, and world markets. The Dow dropped by 1,175 points, the largest single point drop in history. In response to the drop, Trump left out mention of the stock market in an economic speech he gave. Experts contend that the readjustment is due to concerns over rising inflation that could result from the influx of money from the GOP tax bill. There is also the untested leadership of the new Federal Reserve Chairman, Jerome Powell, to deal with economic turmoil if it should arise. In response, the White House tried to distance the administration from culpability by stating the President is focusing on, “our long-term economic fundamentals, which remain exceptionally strong.”
Donald Trump began to take credit for the stock market before he was even sworn in. His first tweet on the matter, sent on December 26, 2016, read, “The world was gloomy before I won – there was no hope. Now the market is up nearly 10% and Christmas spending is over a trillion dollars!” To analyze the responsibility of a President, specifically in the way Donald Trump conceives of it, we need to start at confidence. Trump claims the stock market climbed due to investors placing hope in his leadership. This is partly true and partly overstated at the same time. The stock market expands after elections, according to Jeff Hirsch, editor of the Stock Trader’s Almanac. This growth is commonplace and not solely because of Donald Trump’s enthusiastic outlook.
However, before Trump had any tangible policy effect on regulation, business, taxes, or the economy, he did make the promise of tax cuts and decreased regulation. Experts claim that the mere belief that such market friendly measures would be passed bolstered investment and growth. Further, the GOP, which favors such policies, had control of the house and the senate. Marina Azzimonti, an economics professor at Stony Brook University who created the “Partisan Conflict Index” which measures the impact of partisan gridlock on the economy, finds that more political disunity leads to lower levels of investment.
Taking these aspects into account, we must also acknowledge the foundational work that Barack Obama did in helping our nation heal from the Great Recession. The stock market would not be at the levels it is today if Obama had not led our nation by employing tangible interventions into the economy. Multiple non-partisan sources agree that the crisis would have been a lot worse and we would not be where we are today without his leadership. This translates into the stock market growing at unprecedented rates, but Obama’s policies are not singularly responsible for investor calculations.
At the end of the day, the President is not the sole caretaker of the Stock Market. The President’s job is to implement policies that affect the underlying calculations of investors. But even some of those policies are not the direct purview of the President. For example, the Federal Reserve Chairman is the individual who decides federal interest rates which are vital for investor outcomes.
The Presidency should not live and die by the Dow Jones and the S&P 500. The economy is much more complicated than simple hope or faith in the holder of the highest office in the land. Further, stock market growth should not be a tangible claim of economic stewardship without the necessary actions behind spurring investment. It is one thing to claim success based on infrastructure built, loan programs established, or raising wages through the minimum wage, but it is another to claim economic boon simply because it is your party in power. The stock market is more complicated than who the president is. It is dishonest and misleading to claim credit for its rise or fall simply based on the party in the White House.