President Biden has talked a lot about inflation, making sure Americans know he feels their pain. ‘Inflation saps the strength of many families,’ Biden said said at a union rally in Philadelphia June 14. “Jobs are back, but prices are still too high. COVID is down, but gas prices are up. Our work is not finished.
Biden has the tricky challenge of acknowledging the problems in the economy while remaining optimistic about the outlook. But that doesn’t seem to extend to stock market investors who are taking a beating right now, with the S&P 500 index down 24% from its January peak and the NASDAQ down a staggering 33% from its summit last November.
Biden rarely mentions the stock market unless someone asks him publicly. Last September, when stocks were still strong, Biden said at a White House event, “The stock market has grown exponentially since I became president. You didn’t hear me say a word about it.
He said another word about it on January 7 of this year, when he boasted that the stock market “hit record after record and record under my watch”.
Three weeks later, as stocks began to falter, a reporter asked then-White House press secretary Jen Psaki if Biden was concerned. “Unlike its predecessor” psaki said, “the president does not see the stock market as a means of judging the economy. Our measure of success is how well real working families are doing.
Last month, as the selloff intensified, new White House spokeswoman Karine Jean-Pierre said, “Nothing has changed about how we view the stock market. It’s not something we monitor every day. »
On June 13 — when all of the stock market gains since Biden took office vanished, and more — the White House seemed slightly more worried.
“We know families are worried about inflation and the stock market,” said Jean-Pierre. “It’s something the president is really aware of.”
“The reason our scholarship is so successful is because of me”
The obvious contrast is with President Trump, who often took credit when stocks were up and also weighed in when stocks were down. In the first year of his presidency, Trump tweeted about the stock market dozens of times. In November of his freshman year, Trump said“The reason our scholarship is so successful is because of me.”
Trump was a tireless bull, at least while he was in office. During a sale at the end of 2018, Trump indicated that he was “really a great opportunity to buy.” He issued another buy recommendation in February 2020, just as stocks entered a short lived bear market. Trump’s outlook changed, however, once he was no longer around to propel stocks higher. He repeatedly said during the 2020 election that the stock market would crash if voters elected Biden, and he reiterated that recently.
The market did not collapse after Biden was elected. It has been rising for over a year and peaked on January 3, 2022. But Biden critics/Trump supporters are now arguing that Trump was right, even though bear markets are a normal phenomenon and something probably must have yield after extraordinary amounts of fiscal and monetary expenditures. stimulus produced aall bubble.”
The risk for any president who takes credit for rising stocks is that stocks will also fall, and what do you say then? Biden has another beef with Trump, which he expressed in a June 16 interview with the Associated Press. “The most important thing when I came to this position, which has frustrated me the most for the past four years, is that everything was built, built and arranged so that the richest 1% to 3% of people are doing just fine. Literally everything else seemed like an afterthought.
Biden has clearly tried to focus more on middle- and lower-income Americans, through his appeal to unions; its focus on affordable housing; and his call for higher taxes for corporations and the wealthy. But stocks aren’t just for the rich. More than half of Americans own stocks, mostly in 401(k) plans and other types of retirement accounts. Bear markets can even disrupt retail investors more than professional ones, as typical workers don’t normally have hedging strategies or sophisticated ways to take advantage of declines.
The good news for longer-term investors is that equities had an epic tear starting in 2009, at least partly thanks to the massive help from the Federal Reserve, which had much more to do with the rise in the value of assets than Trump or any other president. Anyone looking at their returns over a period of 5 years or more can still feel pretty good. Overall, Americans’ finances remain healthy, so it’s not as if a bear market in stocks is going to bring down the entire economy.
But Americans’ sense of well-being also depends on whether they are gaining or losing wealth, progressing or falling behind. Equity portfolios contribute to the “wealth effectwhich makes people prosperous, confident and comfortable spending money. In this regard, the current bear market is undoubtedly contributing to the collapse in confidence, which in turn has pushed Biden’s approval ratings to the the lowest levels of his tenureso far.
Should Biden show sympathy for stock investors? It’s hard to see how that could hurt. Biden may fear stockless Americans think he’s pampering elites, while neglecting workers who struggle to fill their pickup trucks with gas. But many people worried about inflation are also disappointed by the fall in stocks. One problem does not exclude the other.
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