Froma Harrop: Biden applies his bragging rights to the stock market
Summary: Biden later swerved back to his party's earlier talking point that the stock market is not the economy. He complained about some people "seeing the stock market and corporate profits and executive pay as the only measure for our econom
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Returns Continue to Trounce Trump's" reads a recent Forbes headline. Sophisticated investors know this, but most of the public may not because Democrats have this self-defeating aversion to boasting about bull markets during their watch.
That seems to have changed under President Joe Biden .
Recall how former President Donald Trump tied every record high to his alleged brilliance as an economic manager. "The Dow Jones Industrial just closed above 29,000!" he tweeted about six weeks before the 2020 election. "You are so lucky to have me as your president. With Joe Hiden' it would crash."
Not quite. Ten months after Biden was declared winner, the Dow Jones Industrial Average was over 34,500. As for the broad-based S&P 500, that stock index has closed at at least 40 all-time highs since Biden has been president.
Happily for Democrats, Biden has claimed his bragging rights. Even better, he's trolling Trump with Trump-like swagger. "The stock market is surging," Biden crowed in a speech honoring labor unions. "It's gone up higher under me than anybody."
Actually, presidents don't have nearly as much control over the stock market as they may claim. New technology influences economic developments, as do black swan events, such as the Sept. 11, 2001, attacks. Then, there was COVID-19.
That said, stocks have certainly done better so far under Biden than under the previous guy. From the last election to late August, all three major indexes — the Dow, S&P 500 and the NASDAQ — had produced higher percentage gains under Biden than in the same period under Trump, according to Forbes.
Stocks did great under President Barack Obama, too, but you heard nary a peep from him about the Dow. And until recently, Biden didn't talk about it either.
Democrats had reasons, not all good ones, for their reticence. In downplaying gains in stock market wealth, they often note that ownership of shares is heavily weighted toward the richest Americans.
That is true. About 92% of stock owned by Americans reside in the top 10% of households. We're including stakes in 401(k)s and other retirement plans, and mutual funds.
Nearly half of all Americans own not a single share of stock. And of the households that do, the median stock value is only $40,000.
But these Democrats often underestimate how many Americans rejoice over a rise in stock prices delivering gains of even a few hundred dollars. And many who don't own any stock associate booming markets with general economic prosperity.
Some liberals, meanwhile, have this sourpuss idea that there's something not quite wholesome about making money in the stock market. After the Trump-era tax cuts favoring rich investors, they want to raise taxes on those with very high incomes, and that makes sense.
But then they must also recognize that stock market rallies produce more taxable income. And the sweet part is that proposals to raise tax rates on capital gains and very high incomes have evidently not depressed Americans' lust for stock investing.
Complicating the messaging for Democrats is that well-to-do Americans account for more and more of their voter base. In 2020, 59% of counties with a median household income over $80,000 went for Biden, whereas only 39% favored Trump. Biden later swerved back to his party's earlier talking point that the stock market is not the economy. He complained about some people "seeing the stock market and corporate profits and executive pay as the only measure for our economic growth."
But did Biden use the word "exponentially" to describe rising stock prices under his presidency? He sure did. "I'm glad it's gone up," he added, "no problem." Good for him, and if this change in tone continues, good for Democrats.