Biden’s stock market record so far is the second worst since Jimmy Carter


New York
CNN Business

The stock market started the Biden era with a boom. But it goes into the midterm elections looking more like a bust.

Entering Monday, the S&P 500 had advanced just 13.2% since President Joe Biden took office in January 2021. That’s the second-worst performance in a president’s first 1,022 calendar days in office since former President Jimmy Carter, according to CFRA Research.

The struggles in the market are largely linked to high inflation, which has led the Federal Reserve to launch a barrage of punitive interest rate hikes.

Of the 13 presidents since 1953, Biden ranks ninth in terms of stock market performance through this point in office, with only former presidents George W. Bush (-21.6%), Carter (-2.6%), Richard Nixon (-7.2%) and Lyndon Johnson (+9.6%), according to CFRA.

By contrast, Biden’s two immediate predecessors sported surging stock markets as they headed into their first midterm elections. The S&P 500 climbed 58.5% during the first 1,022 calendar days in office for former President Barack Obama and 36.2% under former President Donald Trump, according to CFRA.

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Of course, the stock market is not the economy, and it should not be seen as a barometer to govern. Good news for Main Street is sometimes treated as bad news by Wall Street.

Despite recent losses in the market, the jobs market remains historically strong. The unemployment rate is near half-century lows and total employment has returned to pre-Covid levels.

And it’s worth noting that stocks rose in the early days of the Biden era. The S&P 500 spiked 27% in 2021 as the economy bounces back from Covid-19.

“The first year was great. And then we got a lot of it back,” said Sam Stovall, chief investment strategist at CFRA Research.

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Slammed 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 underperformance of the stock market under Biden is important because many Americans have exposure to stocks, either directly or indirectly in their 401(k) and pension plans. This year’s selloff wiped out trillions of dollars from nest eggs, 401(k) plans and college savings plans.

The market turmoil is also denting consumer confidence. A CNN poll found that 75% of likely voters feel the economy is in recession.

Some of the reasons for the 2022 market selloff are largely out of Biden’s control, including Russia’s invasion of Ukraine, Covid-related supply chain headaches and the late Fed response to inflation.

Other factors, such as whether Biden overstimulated an already strong economy with his American rescue plan, will be debated by economists for many years to come. (A paper from the San Francisco Fed argues that fiscal support may have helped boost inflation.)

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It is possible that the stock market bounces back from recent losses – especially if the United States avoids a recession or inflation cools enough to allow the Fed to keep the brakes on the economy. Goldman Sachs told clients on Monday that it is “very unlikely” the Fed will curb inflation without triggering a recession.

On the other hand, retirement accounts could shrink even further if a recession materializes.

“We don’t think it’s over,” Stovall said. “There is a good possibility that the bottom is not in.”

Presidents often get too much credit when things go right and too much blame when things go wrong. But the lackluster market performance under Biden reflects the broader economic challenges weighing on the minds of voters in the midterm elections.

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