I've been waiting to write this diary for quite some time- frankly, longer than I expected. Now that the Dow has finally cracked the level it had reached over 6 years ago, I thought I'd provide a little historical and statistical perspective on this momentous event.
Fiirst of all, the other, and perhaps less sensational way of describing this "all-time high" is that this is the first time that the Dow Jones Industrial Average under Bush has climbed back to where it had already been, over six years ago, in the last year of the Clinton administration. Back then, of course, "all time highs" weren't as celebrated as they are today, because, well... they were pretty common under Clinton. During his administration, the Dow reached a new closing all-time high 266 times, far more than any other modern president:
President |
New Dow highs |
Clinton |
266 |
Reagan |
153 |
Eisenhower |
142 |
Johnson |
123 |
Bush 41 |
56 |
Hoover |
23 |
Kennedy |
19 |
Nixon |
16 |
Bush 43 |
1 |
FDR, Truman,
Ford, Carter |
0 |
Bush has a way to go to beat Hoover- is there enough time? After all, it took 2082 days of the Bush administration to eke out a new high on the Dow. It's hard work...certainly harder than it used to be under Clinton, when the Dow set a new record just 12 days into his first term.
Wait! Not fair!
You can't give Clinton credit for something that happened just 12 days into his term!
Fair enough. If Clinton took advantage of an already-surging stock market under Bush 41, that's hardly to his credit. And what about the "bubble" at the end of the 90's- isn't that where most of these all-time highs happened?
Well...no:
Year |
New Dow highs |
1993 |
33 |
1994 |
12 |
1995 |
69 |
1996 |
44 |
1997 |
39 |
1998 |
30 |
1999 |
35 |
2000 |
4 |
In fact, new all-time highs for the Dow under Clinton mostly occurred during the middle of his tenure, with 217 occurring from 1995 to 1999- after the dreaded tax increase of 1993 that set our nation on a fiscally responsible course- but still more than the total of any modern president. During these years, we enjoyed a record of unparalleled and steady economic growth that rewarded investors and workers alike.
During Bush 43, not so much.
However, it is true that new highs are not a particularly fair measure of economic growth. For instance, FDR and Truman had no new highs over 20 years; it took the Dow that long to come back from the crash of '29-'32. A fairer measure is gain (or loss) in the Dow from the start of the administration:
|
Dow |
|
|
Dow |
President |
change |
|
President |
change
|
Clinton |
+374% |
|
Truman |
+81% |
FDR |
156 |
|
Bush 41 |
46 |
Reagan |
136 |
|
Johnson |
30 |
Eisenhower |
120 |
|
Ford |
27 |
|
|
|
Kennedy |
12 |
|
|
|
Bush 43 |
11 |
|
|
|
Carter |
1 |
|
|
|
Nixon |
-20 |
|
|
|
Hoover |
-81 |
For clarity, I split the ranking into presidents with two full terms or more on the left and those with less than two terms on the right. To be fair, it should be noted that the Dow went up more during Nixon's (+5.7%) and Carter's (+1%) first terms than it did under Bush's first term (-1.0%). And if Dubya ever manages to make it into the left hand column, man...he's gonna need to turn on the jets to stay out of last place.
Oh, and by the way- at +11% to date, the Dow's performance under Bush also falls well behind the CPI over the same period, resulting in a real return of -2.7%... over five and a half years!
Not fair! 9/11! War! Terra, terra, terra! It's not Dubya's fault- the Dow under Bush has been handicapped by world events!
True, but then again, the Dow has somehow managed to grow substantially through World War II, the Korean War, Vietnam, the first Gulf war, and the cold war as well. Perhaps a fairer comparison would be to the stock indices of other countries, who have been subject to the same world market forces we have. Let's give old George an easy comparison- from September 17th 2001 (the first day of trading on the Dow after 9/11) to present:
Index |
Change |
MXX (Mexico) |
+311% |
Bovespa (Brazil) |
246 |
Hang Seng (HK) |
88 |
S+P/TSX (Canada) |
71 |
Nikkei (Japan) |
69 |
MIBTEL (Italy) |
49 |
SMI (Switzerland) |
45 |
DAX (Germany) |
41 |
Dow |
31 |
CAC 40 (France) |
31 |
FTSE (UK) |
22 |
Well, looks like George has another thing to be grateful to Tony Blair for. There must be something...something that I can't quite put my finger on that seems to have held back the markets in the US and UK. Hmm...any thoughts?
Anyway, what about the broader US markets - surely they've done better than this anemic Dow, haven't they?
Um...no.
Index change from peak (all in 3/2000) to present:
Index |
Change |
S+P 500 |
-12% |
Nasdaq |
-55 |
Russell 1000 |
-11 |
Russell 3000 |
-8 |
And when you adjust these figures for inflation...oh, never mind. It's just depressing. Let's just say you can be glad you didn't have your Social Security funds invested in this.
So, let's recap, shall we?
The Dow Jones Industrial Average under President Bush has shown it's worst performance since Hoover, Nixon, or Carter, (and Carter and Nixon actually beat Dubya over each's first term).
It has significantly lagged behind inflation, giving a real return of -2.7% over the entire Bush presidency to date.
Other major US indices are even worse- some much worse.
And among international stock market indices since 9/11, the Dow substantially trails most of the G8, and is even farther behind Mexico, Hong Kong, and Brazil.
Sounds like a cause for celebration to me.