Has the S&P 500 Risen by 25% since November 8, 2016 Thanks to Economic Nationalist America First Policies?

Many people – I don’t think that I need to mention names — are saying that the roughly 25% rise US stock prices in the 13 months since the last Presidential election shows that the economic nationalist America First policies adopted since then have been a roaring success.

Responding to those claims some people have pointed out that the increase in the S&P500 since November 8, 2016 or since January 20, 2017 has been very close to the average yearly rate of increase in the S&P 500 since January 20, 2009, when Barrack Obama took office. Here is a comparison of the year on year rate of increase in the S&P500 since January 20, 2010, one year after Obama took office.

Year

% year over year change in S&P 500

2010

41.3

2011

12.5

2012

2.7

2013

13.5

2014

23.5

2015

9.7

2016

-8.1

2017

22.2

2018

15.8

Now the percent change in the S&P 500 for 2018 is just the change for the 10 and a half months between January 20, 2017 and December 5 2017, so if the current rate of increase in the S&P 500 since January 20 is maintained, the annual increase would be about 18% which would still be less than the year-on-year increase in the last year of the Obama administration. Over the entire 8 years of the Obama administration, the S&P 500 increased by about 220%, or an annual rate of increase of a little over 12% a year. So the S&P 500 in the first year since the adoption of the current economic nationalist America First policies has done better — but only slightly better — than it did on average in the eight years of the Obama administration.

But if we are trying to gauge the success of the economic nationalist America First policies of the current administration, it seems appropriate to take not just the performance of the S&P 500, which disproportionately represents US companies but also the performance of stocks in other countries. One such index is the MSCI EAFE index. (The MSCI EAFE Index is an index designed to measure the equity market performance of developed markets outside of the U.S. and Canada. It is maintained by MSCI Inc.,; the EAFE acronym stands for Europe, Australasia and Far East.)

The accompanying chart shows the performance of the S&P500 and the MSCI EAFE index since January 20, 2009. I have normalized both indices to equal 100 on November 8, 2016.

The two vertical lines are drawn at November 8, 2016 and January 20, 2017, the two dates of especial interest for comparison purposes. In the period between the election and the inauguration, the S&P 500 actually performed slightly better than did the MSCI EAFE. But the opposite has obviously been the case since the new administration actually came into power. Since the inauguration, the economic nationalist America First policies adopted by the administration have resulted in proportionately much greater increases in stock prices in Europe, Australia and the Far East than in the US (as reflected in the S&P 500).

Here are the year over year comparisons:

Year

% year-over-year change in S&P 500

% year-over-year change in the MSCI EAFE

2010

41.3

96.4

2011

12.5

9.5

2012

2.7

-7.5

2013

13.5

1.3

2014

23.5

35.6

2015

9.7

20.9

2016

-8.1

23.4

2017

22.2

26.5

2018

15.8

59

In fact, the MSCI EAFE has outperformed the S&P 500 in every year since 2013. But the gap in the rates of increase in the two indices has skyrocketed since last January 20. I have no doubt that inquiring minds will want to know why the the economic nationalist America First policies of the new administration have been allowing the rest of the world to outperforming the US by an increasingly wide margins. Is that really what winning looks like? Sad!

PS I also can’t help but observe that during the Obama administration, rising stock prices were routinely dismissed by the geniuses at places like the Wall Street Journal editorial page, the Heritage Foundation, and Freedomworks as evidence that Quantitative Easing was an elitist regressive policy aimed at enriching Wall Street and the one-percent at the expense of retirees living on fixed incomes, workers with stagnating wages, and all the others being left behind by the callous and elitist policies of the Fed and the previous administration. Under the current administration, it seems that rising stock prices are no longer evidence that the elites are exploiting the common people as used to be the case before the economic nationalist America First policies now being followed were adopted.

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4 Responses to “Has the S&P 500 Risen by 25% since November 8, 2016 Thanks to Economic Nationalist America First Policies?”


  1. 1 Frank Restly December 10, 2017 at 5:46 pm

    David,

    You might also want to compare U. S. vs. Euro / Japanese interest rates before concluding that stock market performance has anything to do with who is President.

    U. S. Fed Funds Rate
    https://fred.stlouisfed.org/series/FEDFUNDS#0

    Euro Rate
    https://fred.stlouisfed.org/series/FEDFUNDS#0

    Japanese Rate
    https://fred.stlouisfed.org/series/INTDSRJPM193N

  2. 2 Benjamin Cole December 10, 2017 at 8:11 pm

    David-

    If you insist on being sensible and rational in your observations, you leave me no choice but become irrational and insensible to refute you.

    Have you seen how Bitcoin has exploded with Trump in there? That didn’t happen under Obama. Investors have confidence now.

    BTW, fun note: Unit labor costs are down in Q3 2017 from Q4 2015.

    This is what you get when you court super-duper tight labor markets…

    https://fred.stlouisfed.org/series/ULCNFB

  3. 3 William peden December 11, 2017 at 11:24 am

    Hi David,

    I was worried that I might have lost a year, but actually I think that you’re a year out of step in your dates!

  4. 4 David Glasner December 11, 2017 at 12:22 pm

    Frank, I didn’t mean to conclude anything, just pointing out that there are different ways of doing the comparison, and they don’t all point in the same causal direction. Thanks for giving us another way to do the comparison.

    Benjamin, Thanks for the accolade. But you’re not the first to notice that the world has gone mad.

    The world has gone mad today
    And good’s bad today,
    And black’s white today,
    And day’s night today,
    And that gent today
    You gave a cent today
    Once had several chateaux.

    (Cole Porter “Anything Goes” 1934)

    William, It’s been a while. My years were meant to denote the change between e.g. Jan 20, 2018 and Jan 20, 2017. So the entry for 2018 reflects the year to date increase in the S&P500 or the MSCI EAFE over the value on Jan 20, 2017. Does that make sense?


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About Me

David Glasner
Washington, DC

I am an economist in the Washington DC area. My research and writing has been mostly on monetary economics and policy and the history of economics. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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