U.S. President Donald Trump walks towards the White House on the South Lawn after disembarking Marine One in Washington, D.C., U.S., on Monday, Aug. 14, 2017. Photographer: Andrew Harrer/Bloomberg
President Donald Trump is beginning to fall behind his predecessor President Barack Obama on one key gauge of his agenda: The stock market.
From Trump’s Inauguration Day to present, the S&P 500 Index has gained around 7%. That’s less than a third of the 25% gain the S&P posted over the same horizon after Obama took office in 2009. Going forward Trump, who ran on an agenda of business-friendly policies such as tax cuts and deregulation, may find Obama a tough foe when it comes to stock market gains.
During Obama’s eight years in office, the S&P 500 returned 235% or 16.4% annually, one of the best performances of any recent president, as markets recovered from the carnage of the financial crisis and the U.S. economy emerged from the "Great Recession." By the time he left office, Obama’s stock market performance was in-line with gains posted under President Ronald Reagan amid a curbing of inflation, a revival of growth and the market’s quick recovery from the 1987 crash. President Bill Clinton holds the mantle for the biggest gains of any recent president, having held office during the technology boom of the 1990s.
Though comparisons of stock market performance between presidencies don’t tell the whole picture, they can hint at an administration’s accomplishments.
President Trump was elected on an agenda that promised healthcare reform, tax cuts and financial deregulation early on in his presidency. Investors took his election as reason to continue bidding up stocks from their record highs, on expectation that Trump’s policies would bolster growth and corporate profits. From Election Day in 2016 to present, the S&P 500 has gained nearly 14%, underscoring investor enthusiasm for the Trump agenda. That’s still slightly ahead of Obama’s performance, but a recent string of confidence-sapping failures has stalled the so-called "Trump bump."
Trump’s proposed repeal of Obamacare failed to gain enough support to make it out of the Senate and it now sits in limbo despite Republicans holding the White House, Senate and House of Representatives. Tax reform, the big carrot for global investors, is still being worked on, though Trump and his pro-business cabinet such as Treasury Secretary Steven Mnuchin and former Goldman Sachs president Gary Cohn had promised tangible legislation by now.
This week may have been decisive for Trump’s agenda and the stock market roll that he has bragged about on Twitter so often.
Trump’s response to the attack last weekend in Charlottesville, Virginia was so problematic two of his much-hyped business councils quickly disbanded, and one on infrastructure was never even formed. In one fell swoop, America’s CEO president lost the ability to convene the country’s greatest business minds at the White House for photo opportunities that might inspire confidence in his agenda. He also alienated executives overseeing a collective trillions of dollars in stock market value and millions of workers around the United States, powerful allies when selling an ambitious slate of legislation.
Jamie Dimon, head of JPMorgan, said it best after the fallout. "I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville over the past several days," Dimon told his employees in a letter that was released to the public. "Constructive economic and regulatory policies are not enough and will not matter if we do not address the divisions in our country. It is a leader’s role, in business or government, to bring people together, not tear them apart."
This week, polls like Rasmussen that have previously skewed towards Trump continued to cast a decidedly negative review on his performance. As of Friday, Rasmussen showed Trump’s approval index at -22%, down from the positive figures recorded early on in his presidency when issues like healthcare and tax reform had more momentum.
That’s not to say all data is souring on Trump. The nationwide unemployment rate is 4.3% and monthly job gains continue to trend at around 200,000. Measures of consumer and business confidence continue to test new decade highs, gross domestic product continues to grow (albeit at a sub 2.5% rate). Rising inflation has allowed the Federal Reserve to begin consistently hiking interest rates, a boon to the financial sector.
This data underscores the stable canvas that Trump is working with as he tries to revive his agenda. There are pressing economic issues in the country, as JPMorgan’s Dimon noted, but there aren’t raging financial fires such as crises to get in Trump’s way. In that sense, perhaps comparisons between the Trump and Obama stock markets will prove a fair gauge of their accomplishments.
Obama was elected and took office during the worst global financial panic since the Great Depression. Had recovery measures overseen by Obama, his cabinet, and the Federal Reserve proven to be ineffective then markets would not have entered a steady climb from their March 2009 lows. These efforts required constant communication with allies around the world, in addition to business leaders. One can only imagine how markets would have responded if bankers like Jamie Dimon had left the White House near the March bottom with their arms up in the air.
Stock market comparisons between Obama and Trump will only get tougher, but they may hint at truth. At this time in 2009, Obama’s principal task of recovery from crisis was well underway, while Trump’s agenda appears to be stalled. It’s no surprise the market’s 1.5% drop since Wednesday is among the biggest declines of the Trump presidency.