![]() Economic growth cooled, and inflation remained in check. Clinton pushed a tax hike through Congress early in his first term, and the Fed hiked the federal funds rate from 3.25% in January 1994 to 5% in February 1995. While Clinton ran his campaign with the promise of reinvigorating the economy, he “inherited ideal economic conditions” for a stock market boom in the 1990s with inflation falling to less than 3%, Stack says. In November 1980, former actor and California governor Reagan won the presidential election in a landslide. Inflation raged and gold prices spiked to new highs of above $800 per ounce. embassy in Tehran in November and holding hostages until the end of Carter’s presidency. Carter’s term in office was also marked by an energy crisis following the Iranian Revolution that deposed Shah Mohammad Reza Pahlavi in February 1979, and led to revolutionaries seizing the U.S. One year later, however, a deeper recession hit shortly after Federal Reserve Chairman Paul Volcker-in an attempt to fight the inflation of the 1970s- “put his foot on the brake by raising interest rates dramatically,” says Stovall. “It was a very stressful time for investors and the Federal Reserve,” says Stack, adding that 1980 was the “wildest year in monetary history.” A recession hit in January, but was over by July 1980 after the Fed reversed course and brought interest rates down somewhat. economy and by 1979 it had reached double-digit levels. In terms of the economy and the stock market, the peanut farmer and former governor from the state of Georgia didn’t have an easy time in office. While Johnson didn’t preside over a formal recession, “he did end up creating problems for the next administration because of the ‘guns and butter’ philosophy of paying for the Vietnam War,” along with Great Society social programs, says Stovall. “There was a valuation and speculation problem on Wall Street that was similar to the late 1990s,” says Stack referring to the so-called go-go era when glamour stocks including IBM, Texas Instruments, Gulf & Western, Polaroid and Xerox led the charge. ![]() A second bear market hit in 1968, just as Vietnam War protests were heating up. A recession was avoided after the Federal Reserve panicked and reduced interest rates. ![]() Amid rising inflation and interest rates and rising civil unrest associated with the Civil Rights movement, stocks entered a bear market in 1966. President Johnson was sworn in aboard Air Force One before flying back to Washington on the day of Kennedy’s assassination, and the Texan quickly moved to pass JFK’s tax cuts and Civil Rights legislation. stocks in January 1945, would have compounded at an annual total return of 11% and would have been worth $2.3 million by the end of 2019. A $1,000 investment in an index of large U.S. Market gyrations aside, investors can take comfort in the fact that in the long run, buy and hold worked best. In both instances stocks promptly recovered. When Kennedy was assassinated in November 1963 the immediate fall off was 3%. In September 1955, for example, stocks dove 6.5% in a single day when Eisenhower suffered a sudden heart attack after a golf outing. Uncertainty has been the biggest disrupter of markets by far. ![]() The winner among presidents for the best cumulative stock market return is William J. Bush. We also included the ratio of gross federal debt to GDP for the final year of each presidency. That’s because credit is awarded to the president who was in office during its inception, which in this case was George H.W. In some cases like the presidency of Bill Clinton, who was in office during one of the most impressive periods of economic prosperity (and bull markets) in history, you won't see an expansion listed. Using data from the National Bureau of Economic Research (NBER), we’ve also noted for each president the number of expansions and recessions that began during their tenures. In an effort to more closely examine the relationship between the actions of a president and the direction of stocks, Forbes has analyzed their stock market performances, including dividends, dating back to Harry Truman.
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