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Following the election of Trump in 2016, the stock market had the best one-year return since 1944
View related content: Carpe Diem
A year ago tomorrow on the day following the 2016 presidential election, economist Paul Krugman made the following statement in an article in the New York Times titled “The Economic Fallout” (emphasis added):
It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.
Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never. Under any circumstances, putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news. What makes it especially bad right now, however, is the fundamentally fragile state much of the world is still in, eight years after the great financial crisis.
MP: Well, here we are a year later, and how is the stock market doing? Plunging? Falling? Declining? Not at all. In fact, just the opposite, the stock market is booming. Over the last year since the 2016 election, the Dow Jones Industrial Average (DJIA) has increased by 28.5% as of yesterday’s closing. How does that compare to one-year returns for the DJIA following past presidential elections? The chart above shows that the one-year increase of 28.5% in the DJIA since Trump was elected in 2016 is the highest one-year stock market return following a presidential election since the 29.8% one-year return following the re-election of FDR in 1944.
Q: Can we expect a retraction or response from the former economist Paul Krugman?
A: Don’t hold your breath.