Crosspost from http://www.liquidnixon.com
Recently we have seen many instances of Republicans and the corporate media citing "record stock market prices" as evidence of a strong economy and as "proof" that President Bush's economic policies are "working". The facts however are very different. Rather than indicating a strong economy, current prices indicate that the market has only now, 5 years after the 9-11 tragedy, returned to the point it was at prior to President Bush's term and that the President's policies of tax-cuts for the ultra-rich are in fact holding the economy back.
The chart below shows the Dow Jones Industrial Average at the start of each Presidential term since Ronald Reagan took office in January of 1981. President Reagan's two terms netted a total of a 235% increase in the Dow over the 8 years, an average increase of 11.3% per year. The first President Bush saw an increase of 45% over his 4 years in office, an average of 9.75% each year. President Clinton's total was a stunning 327% over 8 years for an average of 15.9% per year. George W. Bush however actually showed a loss of 1% of the Dow's value in his first term, and thus far in his second term has only seen a 14% increase, an average of only 2% per year for the first 5 years of his presidency.
Dow Jones Industrial Average
Presidential Term |
Ending Date |
DJIA |
(End of Carter Administration) |
1/20/1981 |
950 |
Ronald W. Reagan (1st Term) |
1/20/1985 |
1227 (+ 29%) |
Ronald W. Reagan (2nd Term) |
1/20/1989 |
2235 (+ 82%) |
George H. W. Bush |
1/20/1993 |
3242 (+ 45%) |
William J. Clinton (1st Term) |
1/20/1997 |
6684 (+ 106%) |
William J. Clinton (2nd Term) |
1/20/2001 |
10588 (+ 58%) |
George W. Bush (1st Term) |
2/20/2005 |
10471 (- 1%) |
George W. Bush (2nd Term - to date) |
11/5/2006 |
11986 (+ 14%) |
The same data for each year from 1981 through 2005 is plotted on the graph below against a line representing the projected Dow Jones average based on an 11.75% increase per year. 11.75% was chosen because it represents the average annual increase from the start of the Reagan Administration to the end of the Clinton Administration. Typically, market analysts use a figure between 10% and 12% as the typical increase in the Dow, so the 11.75% figure falls within that standard range.
As you can see from the graph, the actual Dow Jones average follows very closely to the 11.75% increase every year until 2000 when president Bush took office. At that time, the market flattened out, then dipped suddenly due to the terrorism on 9-11-2001, recovered in about a year, and has stayed virtually flat ever since. Even if we were to assume that it would take 2 full years to recover from the 9-11 tragedy, and allow an additional year of zero-growth due to an "inevitable recession" as some Republicans have insisted we were facing, that still leaves a period of 3 years where we should have been able to accomplish the standard 11.75% growth. If we had seen that type of growth over 3 years, we would have had a Dow Jones Industrial Average of approximately 14770 by January of 2006. Instead, the Dow was only at 10667 on that date, approximately 2.5% growth over the period previously indicated.
These figures clearly show that the stock market has performed extremely poorly under president George W. Bush, even with very generous allowances for the 9-11 tragedy, and a potentially unavoidable recession. It is clear to me that president Bush's policy of giving tax-gifts to the wealthiest 1% of Americans at the expense of the other 99% is not helping the economy, but is in fact holding it back. It is time to cut-and-run from this failed economic policy and bring some sanity back to the federal budget by rolling-back the tax-cuts for the wealthiest of Americans. If we also reduce taxes on the middle-class, these policies will help the economy by putting more disposable income into the hands of those who will consume it, while simultaneously reducing the federal budget deficit by increasing the revenue stream.