Description: The stock market after two years of each presidency explains more than 80% of the performance after four years. That is, how well the 699 day stock market (almost two years) explains stock market performed after four years (based on all 20 presidencies with at least four years from inauguration since Grover Cleveland’s first term in 1885; Cleveland appears twice on the list). If Trump was part of this list (i.e., 21 presidencies), he would be tenth out of 21 after 699 days and projected to be ninth after four years.
Chart: Stock market performance after 699 days (x-axis) vs. performance after four years (y-axis). Stock market performance is percentage change per year. For example, after two years Bill Clinton’s stock market was increasing at a rate of 8.5% per year but had risen to 27.8% year at the end of four years. The x- and y-axis cross at zero. The dotted line is the line of linear regression. Trump’s estimated four-year performance is based on the linear regression of the other 20 points or presidencies (r-squared=0.66, therefore Pearson correlation is 81%). Data taken from FRED (https://fred.stlouisfed.org/series/DJIA).
- President’s doing well after two years (right-hand-side of chart) generally do well after four years (e.g., Taft is the only president in the lower-right quadrant).
- President’s doing poorly after two years (left-hand-side of chart) generally do not recover by four years. Woodrow Wilson is an exception after the stock market decline 3.1% after two years but finished up 14.2%/yr after four years.
- The past three presidents since 1885 that do not have at least four years of data (and are thus excluded from analysis) are Harding, Kennedy, and Ford.
- President’s with a positive stock market after two years generally win a second term (or had already won a second term). The exceptions are Grover Cleveland’s first term, Taft, and Bush (Sr.).
- Notable president’s doing poorly after two years but still winning reelection include Wilson, Nixon, and Bush (Jr.).