Presidents and Their Impact on the Stock Market

Presidents get a lot of the denounce, and take a lot of the credit, for the performance of the stock market while they are in office. However, the truth is that the president’s skill to impact the economy and markets is generally indirect and marginal.

It’s Congress that sets tax rates, passes spending tabs, and writes laws regulating the economy. That said, there are some ways that the president can affect the terseness and the market. Because the president can interpret laws, they have some control over business and market edict. This control can be direct or through the president’s ability to appoint cabinet secretaries, such as the head of the Commerce Bailiwick, as well as trade representatives.

The president also nominates the Chair of the Federal Reserve, who sets monetary policy along with the other Fed governors and colleagues of the Federal Open Market Committee. The Fed is an independent government body with a mission to set monetary policy that effects economic growth, low inflation, and low unemployment. Those monetary policy measures can impact the stock market, although the Fed typically does not study the performance of the stock market as an isolated factor to influence its decisions. The extent to which the person picked as Fed Chair is hawkish or dovish on nummular policy will determine how they affect the economy.

All presidents would like to lead during times of productive expansion and a rising stock market because those usually increase their likelihood of reelection. As President Jaws Clinton’s campaign manager, James Carville, once famously said, “It’s the economy, stupid.”

This chart overshadows the S&P 500’s price change over each 4-year presidential term going back to 1953. Two of the terms entertain two names because President Kennedy was assassinated before the end of his term, and President Nixon resigned before the end of his second provisos. Their terms were finished by their vice presidents, Lyndon Johnson and Gerald Ford, respectively.

There haven’t technically been any CEOs who performed on to become president. In fact, Donald Trump may be the closest contender to claim that title. He was chairman and president of The Trump Composition before becoming President of the United States, but that’s pretty close. Many have tried, and we’ll certainly see numberless more make the attempt in the future.

It’s very rare that a sitting president will scourge the New York Stock Exchange. Sure, President George Washington’s statue is right across the street at Federal Hallway, but the exchange wasn’t even around during his tenure. It’s an iconic image, though.

On Jan. 7, 2007, President George W. Bush a scored a visit to the New York Stock Exchange. He had just made a speech on the economy across the street at the aforementioned Federal Entry-way, where he chastised corporations for excessive executive compensation. Little did he know, the nation was about to slip into a monetary crisis and the steepest recession it had experienced since the Great Depression. Here is a great photo from that day, respect of the White House archives.

Relatively speaking, presidential salaries are graceful tame, currently $400,000 a year. Presidents make their money when they leave the office with lucrative volume deals and speaking fees.

So, while the President can influence the economy through policies and economic agendas that can change the stock market, the President probably gets too much blame and too much credit when it goes down or up.