President Trump loves to brag about the stock market’s performance under his watch. And for a while, he had a lot to crow about.
But the market has flattened out during the last 18 months, and the performance of the Trump stock market is now subpar compared with six prior presidents. It could end up worse than that, with many analysts forecasting declines, especially if Trump’s trade war with China intensifies.
As part of our Trumponomics Report Card, Yahoo Finance measures the performance of the S&P 500 stock index under Trump compared with its performance under six prior presidents, going back to Jimmy Carter, at the same point in their presidencies. A year ago, the Trump stock market ranked second out of seven, behind only Barack Obama. But now he ranks fifth, behind Obama, Bill Clinton, George H.W. Bush and Ronald Reagan. He’s still ahead of the George W. Bush and Jimmy Carter stock markets, after 32 months in office.
It’s obvious why Trump is stumbling. The S&P 500 (^GSPC) has risen less than 1% during the past 12 months. That coincides with the escalation of Trump’s trade war with China, including tariffs on Chinese imports to the United States and retaliatory tariffs on American exports to China. Economists, investors and CEOs say Trump’s protectionist trade policies are the top issue clouding the economic outlook.
The manufacturing sector is now in a recession. Business investment is falling. The New York Federal Reserve puts the odds of a recession within the next 12 months at 38%. The flat stock market reflects all of those concerns.
There are positives. Consumer spending is holding up, and the unemployment rate is at a 50-year low. On our Trumponomics Report Card, based on data provided by Moody’s Analytics, Trump ranks first for wage gains among the seven presidents, and third for employment growth. His overall grade is a solid B, the same it has been all year. Trump’s highest grade on the report card was an A-, notched in November 2017.
We measure stock-market performance as an index number, beginning in February after each president takes office. That’s meant to measure each president’s actual performance in office, not just investor expectations, which tend to be priced into stocks well ahead of policy action. If we measured stock performance from the date of the election instead, Trump’s performance would look better, since stocks rose after Trump won in 2020.
To some extent, expectations for Trump have exceeded reality. Trump did deliver the tax cuts and deregulation he promised, which businesses like. But companies have spent much of the tax-cuts payout on stock buybacks and dividend hikes, rather than investing more, as Trump promised. And investors, by and large, didn’t expect Trump’s trade war would become so intense or last so long. With both sides dug in, the U.S.-China trade war could last the rest of Trump’s term, and maybe longer. Stocks will behave accordingly.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: firstname.lastname@example.org. Encrypted communication available. Click here to get Rick’s stories by email.