I’ve seen a number of memes on social media attributing the five and a half year rise in the stock market’s value to the Obama administration. A number of writers have also noted overall economic growth, especially in the stock and labor markets, under the Obama administration.
For example, in a September 2014 piece for Forbes, Adam Hartung argues that President Obama may be the best modern economic president in U.S. history. In the piece he compares President Obama’s policies with those of the reigning best modern economic president, Ronald Reagan. Citing an interview with Polaris Financial Partners CEO Bob Deitrick, Mr. Hartung writes:
“President Obama has achieved a 6.1% unemployment rate in his sixth year, fully one year faster than President Reagan did. At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year. So, despite today’s number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.”
Mr. Hartung writes further:
“What’s now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction. Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the eight years preceding Obama there was a net reduction in jobs in America. We now are rapidly moving toward higher, sustainable jobs growth.”
And as for investors, Mr. Hartung notes that they should be happier with an Obama administration’s performance versus the Reagan administration’s performance. Again he writes:
“A dollar invested when Reagan assumed the presidency would have yielded a staggering 190% return. Such returns were unheard of prior to his leadership.
“However, it is undeniable that President Obama has surpassed the previous president. Investors have gained a remarkable 220% over the last 5.5 years! This level of investor growth is unprecedented by any administration, and has proven quite beneficial for everyone.”
While Mr. Hartung doesn’t describe specific policies contributing to Mr. Obama’s success, he reminds readers of the shrinking budget deficit under Mr. Obama probably attributed to a reduced federal government workforce.
Michael Hiltzik writing for the L.A. Times asks point blank why Mr. Obama’s detractors do not give the President credit for a five year bull run that, according to Mr. Hiltzik, has seen the S&P under Mr. Obama climb 148%.
Both Mr. Hiltzik and Mr. Hartung admit that presidents have little impact on the economy much less the stock market. For Mr. Hartung’s part he gives the President 15-25% of the credit for the growth in the stock market and the economy as a whole, emphasizing the current administration’s role in implementing the Toxic Asset Relief Program (TARP); the bailouts of General Motors and Chrysler; and the 2009 stimulus package.
Even conservative columnist like Townhall.com’s Mark Skousen admit that Mr. Obama has presided over economic growth, stock gains, and jobs added in the labor market, but tempers the observation with a reminder of how the Federal Reserve’s easy money policy may have helped fuel growth in the stock market as well.
But has Mr. Obama’s good fortune with stock market growth spread to performance of entrepreneurs? According to Investors.com, not really. Citing a report by the Brookings Institution, Investor.com noted that the number of U.S. businesses being destroyed was faster than the number of businesses created. The rate of business births has declined since President Obama took office.
Possible cause for lackluster small business growth stems from two market interventionist pieces of legislation; the Affordable Care Act and the Dodd Frank Act. According to Investors.com, citing a Gallop Poll survey, half of small businesses froze hiring while one-fifth of small businesses reduced staff because of the requirements under the Affordable Care Act. Small business owners also argue that because of Dodd Frank, capital has dried up.
And as James Pethokoukis wrote in his blog for the American Enterprise Institute, Mr. Obama seems to have put entrepreneurs on the back burner. He cites data showing the wide gap in the effective tax rate for big businesses (12.6%) and small businesses (35%) and Mr. Obama’s apparent failure to advocate for better tax treatment for entrepreneurs.
The irony is that the financial and health sectors have seen their market values increase by 27.59% and 15.53% in the past year even under increased regulation.
Yes, Wall Street has done well under Mr. Obama. Independent start-ups? Not so much.