Presidents and Their Impact on the Stock Market

Presidents are largely blamed and take much of the credit for stock market performance during their tenure. However, the truth is that the president’s ability to influence the economy and markets is usually indirect and marginal.

It is Congress that sets tax rates, passes spending bills, and writes the laws governing the economy.That said, the president can affect the economy and the market in certain ways.

How Presidents Impact the Stock Market

Because the president is responsible for implementing and enforcing laws, he has some control over business and market regulation. This control can be direct or through the president’s ability to appoint cabinet secretaries, such as the head of the Commerce Departmentas well as sales representatives.

The President also appoints the President of the Federal Reservewho defines monetary policy with the other governors of the Fed and the members of the Federal Free Market Committee. The Fed is an independent government agency whose mission is to set Monetary Policy which ensures economic growth, low inflation and low unemployment.

These monetary policy actions can impact the stock market, although the Fed generally does not view stock market performance as an isolated factor to influence its decisions. The extent to which the person chosen as Fed Chairman is falcon Where dovish on monetary policy will determine their impact on the economy.

All presidents would like to lead in times of economic expansion and rising stock market, as these generally increase their likelihood of re-election. As President Bill Clinton’s campaign manager James Carville once said, “It’s the economy, you idiot.

This chart shows the price movement of the S&P 500 during each four-year presidential term since 1953. Two of the terms have two names because President Kennedy was assassinated before the end of his term and President Nixon resigned before the end of his term. end of his second term. . Their terms were completed by their Vice Presidents, Lyndon Johnson and Gerald Ford, respectively.

CEO Presidents

Technically, no CEO has become president. In reality, donald trump may be the closest candidate to claim this title. He was president and chairman of the Trump Organization before he became president of the United States, but that’s pretty close. Many have triedand we will certainly see many more make the attempt in the future.

Presidents and the NYSE

It is very rare for a President-in-Office to go to the New York Stock Exchange. Sure, the statue of President George Washington is right across the street from Federal Hall, but the exchange was barely established during his tenure. It’s an iconic image, though.

President Bush visits the NYSE

On January 31, 2007, President George W. Bush paid a visit to the New York Stock Exchange.He had just delivered a speech on the economy across the street at the aforementioned Federal Hall, where he berated companies for excessive executive compensation.He did not know that the nation was about to descend into a financial crisis and the longest recession it had known since the Great Depression.Here’s a great photo from that day, courtesy of the White House Archives.

White House Archives /CC0-PD

Presidential salaries

Relatively speaking, presidential salaries are rather modest, currently $400,000 per year.Presidents make their money when they leave office with lucrative book deals and speaking fees.

The essential

So while the president can influence the economy through economic policies and programs that can impact the stock market, the president likely receives too much blame and too much credit when it goes down or up.