US Stock Market: Better Performance Under Democrats?

The performance of the US stock market has historically varied depending on the political affiliation of the president in office. Data spanning from 1925 to 2024 reveals a consistent trend: the stock market performs better under Democratic administrations than Republican ones. While Republicans are traditionally considered the pro-business party, their presidencies have seen three major stock market crashes. These occurred under Herbert Hoover, Richard Nixon, and George W. Bush, tied to the Great Depression, the Watergate scandal, and the global financial crisis, respectively. In contrast, Democratic presidencies averaged a 51% increase in stock prices, nearly double the average of 25% under Republican leadership. Notable Democratic successes include Bill Clinton’s presidency, which led to a 151% market boost. Such trends may be linked to Republicans' tendency towards deregulation and risk-taking, which, while fostering short-term gains, leave markets vulnerable to systemic shocks. Meanwhile, Democrats often employ more cautious and regulatory approaches, cultivating more stable and substantial long-term growth. The article also highlights Robert Shiller’s warning of more modest future returns, raising concerns amidst inflationary pressures, trade tensions, and economic populism. These historical patterns provide vital lessons for policymakers but leave open questions about how contemporary strategies might reshape these dynamics.