![]() Most recently, many predicted the market’s immediate demise if then-2016 nominee Donald Trump were to win. The numbers don’t support this and, in fact, show how volatility is surprisingly lower! A common misconception is that markets experience a sharp uptick in volatility before and after elections. The “experts” will come out of the woodwork with investment advice on the bold portfolio changes to make to prepare yourself. In the run-up to November, the headlines and general opinions regarding which candidate could sink the economy and equity markets will only intensify. Certainly, differences exist between this election and others in the past, but a look at election-year stock market history can still help shed light on expectations for the market and economy. That quickly changed once COVID-19 started to unfold, but with election day approaching, the attention has shifted back to this very polarizing election. Coming into 2020, the presidential election was poised to dominate the headlines and drive market volatility. ![]() The report is titled “The Trump Economy: Three Years of Volatile Continuity” and can be downloaded from the Cato Institute website at. He federal government very badly prepared to deal with an economic shock. Most serious of all, however, are the author’s conclusions with respect to the administration’s ability to handle the economic impact of the coronavirus crisis.Īmong other failings, the author accuses the Trump administration of “poor economic understanding”, criticzes its trade policies, and notes that a “central-planning mentality” is “smoldering in D.C.” with potentially disastrous results. The author examines several other aspects of the economy, including deregulation and trade, with similar results. So, what did President Trump do about the annual deficit during his first three years in office? As Figure 8 shows, he oversaw an increase in the deficit from $585 billion in Obama’s last year to $984 billion in the fourth quarter of fiscal year 2019. The report’s author calculates that this goal “would have required, over each of those eight years, a reduction in expenditures of 61% or an increase in taxes (which make up nearly all federal revenues) of nearly 70%.” Instead, Trump did the exact opposite: The stock market under Obama, he demonstrates, grew at about the same rate as it has under Trump – and was also characterized by lower volatility:ĭidn’t the booming stock market indicate something special with the Trump economy? In fact, the stock market was not much different, and was less volatile, under Obama.ĭuring his 2016 campaign, Trump pledged to eliminate the budget deficit during what he hoped would be his 8 years in office. But again, the author finds little to distinguish the two. ![]() What about the stock market? This is another classic Republican focus, so we could expect that the market under Trump has outperformed that under Obama. Here too, Trump’s record is not much different than Obama’s. Republicans usually put growth as one of their top goals, but again, the author finds that Trump’s record hasn’t been too different from that of his predecessor:Īlong with employment, the Trump administration likes to trumpet its record on economic growth. ![]() Next, the author examines economic growth trends. That is true, but they similarly benefited during Obama’s second term. The Trump administration likes to stress that African Americans and Hispanics have especially benefited from the decline in unemployment. While unemployment has declined under Trump, the same thing occurred under Obama: First, the author looked at the unemployment rate. ![]()
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