The stock market started the Biden era with a boom. But he heads into the midterm election looking more like a bust.
Coming Monday, the S&P 500 is up just 13.2% since President Joe Biden took office in January 2021. It’s the second-worst performance in the first 1,022 calendar days in office. a president since former President Jimmy Carter, according to CFRA Research.
The struggles in the market are largely tied to high inflation, which prompted the Federal Reserve to launch a series of punitive interest rate hikes.
Of the 13 presidents since 1953, Biden ranks ninth in stock market performance at this point in his term, trailing only former presidents George W. Bush (-21.6%), Carter (-2.6%) ), Richard Nixon (-7.2%) and Lyndon Johnson (+9.6%), according to the CFRA.
By contrast, Biden’s two immediate predecessors sported booming stock markets as they headed into their first midterm election. The S&P 500 climbed 58.5% during former President Barack Obama’s first 1,022 calendar days in office and 36.2% under former President Donald Trump, according to CFRA.
Of course, the stock market is not the economy, nor should it be seen as a barometer to govern towards. Good news for Main Street is sometimes treated as bad news by Wall Street.
Despite recent market losses, the job market remains historically strong. The unemployment rate is near half-century lows and total employment is back to pre-Covid levels.
And it’s worth noting that stocks surged at the start of the Biden era. The S&P 500 jumped 27% in 2021 as the economy rebounded from Covid-19.
“The first year was great. And then we gave back a lot of it,” said Sam Stovall, chief investment strategist at CFRA Research.
Damaged by the Fed’s all-out war on inflation, the S&P 500 is down 20% this year, on track for its worst year since 2008.
The stock market’s underperformance under Biden matters because many Americans have exposure to stocks, either directly or indirectly through their 401(k) and retirement plans. This year’s liquidation wiped out trillions of dollars from nest eggs, 401(k) plans and college savings plans.
Market turbulence is also shaking consumer confidence. A CNN poll found that 75% of likely voters believe the economy is in a recession.
Some of the reasons for the 2022 market sell-off were largely beyond Biden’s control, including Russia’s invasion of Ukraine, Covid-related supply chain headaches, and the late response from the Fed to inflation.
Other factors, like whether Biden overstimulated an already strong economy with his US bailout, will be debated by economists for many years to come. (An article from the San Francisco Fed argues that fiscal support may have helped boost inflation.)
It is possible that the stock market will rebound from recent losses, especially if the United States avoids a recession or if inflation cools enough to allow the Fed to stop dragging the economy. Goldman Sachs told clients on Monday that it was “highly plausible” that the Fed would bring inflation under control without triggering a recession.
On the other hand, retirement accounts could shrink further if a recession materializes.
“We don’t think it’s over,” Stovall said. “There’s a good chance the bottom isn’t in it.”
Presidents often get too much credit when things go well and too much blame when things go wrong. But the lackluster market performance under Biden reflects the broader economic challenges weighing on voters’ minds in this midterm election.
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