I recently asked a family member if he thought now was a good time to invest in the stock market because it is significantly lower than it was earlier in the year. His response was “not if Democrats get elected this fall.”
Given his response, I thought it would be interesting to research stock market returns over Republican and Democratic administrations. Once I started looking, I found that there is a lot of very easily accessible nonpoliticized data about this topic. I looked at data from Reagan to Trump (the last 40 years). It was easy to find total market growth over different administrations, but to make it comparable I converted it into annual average growth rates for each administration.
Surprisingly, stock market growth rates during Democratic administrations was higher than during Republican administrations. Actually, much higher. I then thought it would be interesting to look at other economic metrics as well. I selected GDP, and unemployment rates. Again, surprisingly, GDP was higher and unemployment was lower under Democratic administrations.
Maybe I picked the wrong metrics. Maybe significant externalities only happened during Republican administrations. Or, maybe having a tendency to focus on people issues actually produces better economic results.
Marc Peterson
Sandy