January 16th 2018 saw President Donald Trump tweet “The stock market is way up again today and we’re setting a record, literally all the time”. Following on by saying that if Hillary Clinton would have won the election then “the market would have gone down 50% from where it was”.
Wether you love Donald Trump or hate him, there is no denying that the performance of the stock market has improved since he took office in 2017.. and he sure likes to remind us. But this leads to ask the question, how much difference has President Donald Trump made on the stock market?
Lets look at the S&P 500, January 21 2017, the day after Donald Trump was elected into office saw a price of 2,812. The index sat at 2,367. In non-financial terms this is a good return for the market.
What Credit Can Trump Take?
One year and 196 days into his presidency Trump has made some big changes to corporate regulation. He has in fact removed so much corporate regulation that companies such as General Motors and Lockheed Martin are bringing jobs back to the US.
Less regulations means less cost to run the business and more freedom to carry out business as the exec’s seem fit. This freedom is attractive to large companies because it will result in higher profits, which causes stock prices to increase.
For President Trump, Tax cuts are also a bonus.. for individuals the new tax regulations may not make much difference. But for conglomerates the new Tax cut means greater profits. For Trump the higher a companies profits are, the higher their stock price is.. meaning that he gets credit for making the stock market ‘better’.
A Possible Crash
Some market analysts believe that there will be a stock market correction in 2018 or worse. J.P. Morgan Bank investment specialist Patrick Schafferhas said “buy the next sell-off, and the odds are high it’ll happen this year.”
If there is a stock market crash will President Trump be responsible? The only way to know is analyze the crash after is has happened, so the causing factors can be identified.
Despite stock market numbers being wildly profitable these past few moths, many people are not capitalizing on investments. The number of people buying stocks has decreased from 62% of households to 54% of Americans owning stocks.
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Donald Trump Vs Other Presidents Stock Market Impact
When comparing S&P 500 gains for the first year of every president, Donald Trump comes fourth in the success chart.
- Roosevelt caused the stock market to increase by 30.5% in his first year.
- Kennedy had a 27% increase in his first year.
- George Bush Sr enjoyed the stock market increasing by 22.2%.
- Donald Trump caused the stock market to increase by 21% in 2017.
Donald Trump can take some credit for stock market prices increasing. But not all of it. When looking at the stock market and US economy there is lots of moving parts to look at. For example, interest rates, international growth, taxes, public policy and much more. No one, not even the leader of a country can single handedly impact the entire stock market on their own.
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