The White House has been pushing the “Bidenomics” slogan as the 2024 elections approach and since President Joe Biden entered office stocks have generally trended upward.
While stock market performance is just one metric of several that are used to assess the health of the economy, Biden can tout that, on balance, most major stock indexes have increased in value since January 2021. Still, critics will contend that stocks would have fared even better under a different president and different policies coming out of the White House.
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The S&P 500 has grown by about 16% since the start of Biden’s presidency, the Dow Jones Industrial Average has increased by more than 11%, and the tech-heavy Nasdaq — which suffered big losses in 2022 but has since boomed this year — is up nearly 2% since Biden was sworn into office. Notably, the Nasdaq is up a massive 33% in just the past six months.
Shelton Weeks, the Lucas professor of real estate at Florida Gulf Coast University, told the Washington Examiner on Monday that the stock market has outperformed expectations. He pointed out that the Federal Reserve has been hiking rates at a historic pace, something that one would conventionally expect to hurt the stock market over time.
“I am kind of surprised at how well the stock market has held up. If you had told me when we were at the start of the Fed’s tightening cycle that the market would perform as well as it has, I probably would have laughed,” Weeks said.
When the Fed hikes rates it applies downward pressure on economic output. Because rates were so low for so long during the pandemic, inflation got out of hand, and in order to stifle those high prices the government is trying to depress demand, which in turn can cause unemployment to rise and gross domestic product growth to turn negative.
But more than a year after the barrage of rate hikes began, the labor market is still humming right along and GDP growth has remained positive, two factors that are keeping the stock market above water.
The economy far surpassed expectations in May and notched 339,000 jobs while the unemployment rate crept up slightly to a still-low 3.7%. Job openings also unexpectedly increased in April, rising to above 10 million for the first time since January, showing that employers are still looking for workers to hire.
“During the period of getting inflation under control, [on] the employment side we’ve been showing a great deal of resiliency, which bodes well for the stock market,” Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program, told the Washington Examiner.
Additionally, the Bureau of Economic Analysis announced last week that first-quarter GDP growth clocked in at a 2% annual rate, adjusted for inflation, a major upward revision from the previous estimate of 1.3%.
Declining GDP is the biggest indicator of an economic downturn or recession. Typically, two back-to-back quarters of negative GDP growth are indicative of a recession. So, the fact that the GDP was positive in the first quarter is welcome news to the stock market, which many predicted just months ago would be taking a walloping at this point in 2023.
Marks said that some of that growth in the stock market over the past two years or so is also attributable to the post-COVID economic recovery that featured many economic factors bounding back to where they were prior to the pandemic taking hold.
“So coming out we’re seeing a rebalancing across various types of companies,” Marks said.
Marks pointed to Biden’s policies on the manufacturing sector as having impacted the stock market. He said that Biden has leaned toward building infrastructure and manufacturing through initiatives like CHIPS Act and bipartisan infrastructure spending.
Crucially though, Republicans have argued that Biden’s policies are a big part of what caused inflation and the need to hike rates so forcefully. They contend that the massive infusion of COVID-19 spending overheated the economy and fueled today’s inflationary scourge. Without Biden, the market might have grown even more, his critics say.
“‘Bidenomics’ is just liberal code for more reckless government spending fueling inflation. Extreme House Democrats all support it, but everyday Americans see none of the benefits,” said Will Reinert, national press secretary for the National Republican Congressional Committee.
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Marks said that the stock market might have performed better than it has under Biden if there weren’t the headwinds — like inflation and rising interest rates — affecting the market. While the stock market has been, on balance, up since Biden took office, it had the potential for perhaps even more growth, he said.
“Given the level of uncertainty and concerns about recession, absent that, and absent war in Ukraine and absent the issues with China … we actually could have seen better stock performance, but let’s remember stock performance is not the sole bellwether of what’s going on,” Marks said.
