“Biden’s stock market returns continue to outperform Trump,” read a recent Forbes headline. Savvy investors know this, but the majority of the public dislike this because the Democrats have this self-destructive reluctance to brag about bull markets while they watch.
That seems to have changed under President Joe Biden.
Recall how former President Donald Trump linked every record high to his supposed brilliance as an economic manager. “The Dow Jones Industrial just closed over 29,000!” He tweeted about six weeks before the 2020 election. “You are very lucky to have me as your president. With Joe Hiden ‘it would crash. “
Not quite. Ten months after Biden was declared the winner, the Dow Jones Industrial Average was over 34,500. The broad-based S&P 500 has closed at least 40 all-time highs since Biden’s presidency.
Fortunately for the Democrats, Biden has claimed his bragging rights. Better yet, he’s trolling Trump with Trump-esque bragging rights. “The stock market is booming,” Biden crowed in a speech in honor of the unions. “It has risen higher than anyone under me.”
In fact, presidents don’t have nearly as much control over the stock market as they may claim. New technologies are influencing economic development, as are Black Swan events such as the September 11, 2001 attacks. Then there was COVID-19.
However, the shares under Biden have so far certainly performed better than under the predecessor. From the last election to the end of August, Forbes said all three major indices – the Dow, S&P 500 and NASDAQ – had higher percentage gains under Biden than they did over the same period under Trump.
Stocks did well under President Barack Obama, but you hardly heard any references to the Dow from him. And Biden didn’t talk about it until recently, either.
The Democrats had reasons for their reluctance, not all good ones. When downplaying wealth gains in the stock markets, they often find that ownership of stocks weighs heavily on the richest Americans.
This is true. About 92% of American-owned stocks are in the top 10% of households. We include holdings in 401 (k) s and other retirement plans and mutual funds.
Almost half of all Americans don’t own a single stock. And of the households that do, the average stock value is only $ 40,000.
But these Democrats often underestimate how many Americans enjoy a surge in stock prices that can bring them even a few hundred dollars in profits. And many who do not own stocks associate booming markets with general economic prosperity.
Some liberals have gotten this sour idea that it’s not entirely healthy to make money in the stock market. After the Trump-era tax cuts in favor of wealthy investors, they want to raise taxes for those with very high incomes, and that makes sense.
But then they also have to acknowledge that stock market rallies bring more taxable income. And the beauty of it is that proposals to increase tax rates on capital gains and very high incomes obviously haven’t dampened Americans’ appetite for equity investments.
To make matters worse for the Democrats is the fact that affluent Americans are increasingly making up their electoral base. In 2020, 59% of counties with median household incomes over $ 80,000 voted for Biden, while only 39% preferred Trump.
Biden later returned to his party’s earlier talking point that the stock market is not the economy. He complained that some people “view the stock market, corporate profits, and executive salaries as the only measure of our economic growth.”
But did Biden use the word “exponential” to describe rising stock prices under his presidency? He definitely has. “I’m glad it went up,” he added, “no problem.” Good for him, and if that change of tone continues, good for the Democrats.
Froma Harrop’s column is syndicated by Creators.