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STRIKE FIVE: WALL STREET v. MAIN STREET
The Claim
For most of 2018 and 2019 — time after time and tweet after tweet — Donald Trump pointed to the hot stock market as proof that the tax cuts were working.
The Truth
First of all, THE STOCK MARKET IS NOT THE U.S. ECONOMY!! Hyping a hot stock market as proof that the tax cuts are working is a false premise and shows a complete misunderstanding of what life is like for many Americans — as well as how the stock market actually works.
Responsible people recognize markets are not an accurate reflection of the overall economy, and it’s certainly not a reflection of what is happening in the homes of the vast majority of Americans. That whole Wall Street vs. Main Street adage is overused, but the truth is that Wall Street and Main Street live in two completely separate (terribly unequal) universes.
In any event, the stock market didn’t do better after the tax cuts anyway. Stock market returns during the Trump administration rank 8th when compared to other presidents. Behind, in order, Bill Clinton, Barack Obama, Dwight Eisenhower, Ronald Reagan, Harry Truman, George H.W. Bush, and Lyndon Johnson. But let’s dig a little deeper.
Fortune magazine reports that “on October 31st of Obama’s third year in office, the S&P 500 (the 500 largest public companies on either the New York Stock Exchange or Nasdaq exchange, measured by market capitalization) hit 156 percent of the value it had on President Obama’s first day in office, which means the index increased by 56 percent.”
In that same timeframe, “under Donald Trump the increase was 34 percent, or 22 percentage points lower than the gain under Obama.”
Ouch. Let’s check the other exchanges. Using the same timeframe, on the Dow — which is 30 large capitalized (“large cap”) companies that are chosen specifically by Dow Jones & Company in an attempt to represent the broader economy — “the percentage change under Obama was roughly 150 percent, meaning a 50 percent increase over the initial value. Under Donald Trump, the 136 percent change, or 36 percent gain in value, was 14 percentage points less.” Interesting.
Well, surely the Nasdaq was better for the super-duper stock market wrangler Donald Trump? Nope. During the Trump administration, “the Nasdaq saw a 149 percent change for an increase of 49 percent. At the same point under Obama, it was a change of 186 percent — an increase of 86 percent, or 37 percentage points more than for Donald Trump.” Double ouch.