Was The Stock Market Better Under Trump
So, you’ve been wondering, right? Like, a lot of us have. The big question that keeps popping up over lattes and during those awkward elevator rides: Was the stock market actually better under Trump? It’s a question that gets tossed around more than a frisbee at a beach party. And honestly, it’s not a simple yes or no, is it? Life, and especially the economy, is usually a bit more… complicated. But let’s dive in, shall we? Grab your metaphorical coffee cup. We’re going to spill the tea, or should I say, the stock market report.
First off, let’s set the scene. We’re talking about the years 2017 through 2020. The Trump presidency. Remember those days? Feels like a whole other lifetime ago, doesn't it? A lot was going on, and the market, well, it seemed to be doing its own thing. Or was it? That’s the million-dollar question, and maybe even a few billion dollars, depending on your portfolio.
Now, if you just look at the raw numbers, the S&P 500, which is like the big kahuna of stock market indexes, it did go up. Like, really up. From January 2017 to the end of Trump’s term in January 2021, the S&P 500 jumped something like 65%. That’s a pretty sweet gain, if you ask me. If you had your retirement money tied up in there, you were probably doing a happy dance, right? More than double what it did under Obama’s last four years. So, on the surface, that’s a pretty big checkmark for the “yes” column.
And it wasn't just the S&P 500. The Dow Jones Industrial Average, another heavy hitter, also saw some serious gains. It crossed the 20,000 mark for the first time ever during his term. Imagine the headlines! Big, bold numbers. People were talking about it. It felt like a golden age for investors, or at least, a pretty darn good one. Think of all those retirement accounts and 401(k)s getting a nice little boost. Woohoo!
But here’s where things get a bit more… nuanced. It’s like looking at a beautiful cake and then noticing a tiny fly on the frosting. You can still enjoy the cake, but that fly is just… there. A lot of economists will tell you that the market was already on an upward trajectory before Trump took office. The Obama administration left the economy in a pretty decent place, coming out of the 2008 financial crisis. So, was Trump just riding a wave that was already crashing onto the shore? That’s a valid point to consider.
Then you’ve got the tax cuts. Oh boy, those tax cuts. The Tax Cuts and Jobs Act of 2017. This was a big deal. They slashed corporate tax rates from 35% to 21%. Think about that. Companies suddenly had a lot more money in their pockets. And what do companies with more money do? They often invest it. They buy back their own stock, which can artificially inflate its price. Or they pay out dividends. Or, in a perfect world, they invest in new projects and hire more people.
And guess what? Stock buybacks did increase. A lot. This is where the “was it really better?” question gets really interesting. If companies are just buying back their own stock, that’s good for the stock price, sure. But is that the same as real, organic growth? Is that creating sustainable jobs and long-term economic health? These are the tough questions that keep economists up at night, probably fueled by a lot of coffee and existential dread.
So, while the market was going up, some people argue it was partly because of policies that might not have been the best for the overall economy in the long run. It’s like giving someone a sugar rush. They feel great for a bit, but then the crash can be pretty brutal. And speaking of crashes…
Let’s not forget about the trade wars. Remember those? Tariffs on goods from China, Europe, you name it. This was a pretty… aggressive approach. Trump’s idea was to protect American industries and jobs. And sure, for some specific sectors, maybe it helped. But for others? It was a total headache. Companies that relied on imported parts saw their costs skyrocket. Consumers ended up paying more for certain goods. And the uncertainty? Ugh, the uncertainty. Markets hate uncertainty. It’s like trying to invest in a game where the rules keep changing mid-play. Not ideal.
The trade tensions created a lot of volatility. You’d see the market jump on good news, then dive on a tweet about new tariffs. It was a rollercoaster, and not in the fun, amusement park way. More like the “hold onto your hats, we might fly off the tracks” way. So, while the overall trend was up, there were definitely some wild swings that made investors a little seasick.
And then, of course, there’s the elephant in the room: COVID-19. The pandemic hit in 2020, and let me tell you, it was a shocker. The market plunged like a stone. Businesses shut down, people lost jobs, the global economy went into a tailspin. It was terrifying. Remember those days? The news was just… bleak.
But then, something interesting happened. After the initial panic, the market started to recover. And not just recover, but soar. A lot of this was due to the massive stimulus packages passed by the government. Trillions of dollars injected into the economy. And the Federal Reserve, the central bank, kept interest rates super low. This made borrowing cheap and encouraged investment. So, the market rebounded, and then some. By the end of Trump’s term, it was hitting new highs.
So, was that Trump’s doing? Well, he was president, so his administration was involved in the response. But a huge chunk of that recovery was also due to the legislative response under his watch, and the independent actions of the Federal Reserve. It’s a tangled web, isn’t it? Like trying to untangle headphone cords that have been in your pocket for a week.
Let’s break it down a bit more. If we look at specific sectors, you see different stories. Tech stocks, for example, did incredibly well. Companies like Amazon, Apple, Microsoft, they just kept growing. And while some of that is innovation and smart business, let’s be honest, a lot of it is also about those low interest rates making borrowing for expansion easier, and those tax cuts giving them more cash to reinvest.
On the flip side, some industries struggled. The trade wars, as we mentioned, hit manufacturing and agriculture pretty hard. And the pandemic, well, that was brutal for travel, hospitality, and a whole host of other businesses. So, the "stock market" isn't a single entity; it's made up of thousands of different companies, each with their own story.
Now, let’s talk about unemployment. This is a big one for everyday people. Under Trump, unemployment rates hit historic lows. Like, really low. For African Americans, Hispanic Americans, women – pretty much everyone. This is a huge positive. People had jobs, they were earning money, and that confidence can definitely spill over into the stock market as people feel more secure spending and investing. So, from that perspective, things were definitely looking up for a lot of Americans.
But again, the caveat. The trend of declining unemployment started before Trump. So, he inherited a good situation and continued it. Was it his policies that solely drove that? Or was it the continuation of an economic cycle? It’s like a runner hitting their stride. Was it the pre-race warm-up or the inherent talent that made them run fast?
Let’s consider another factor: global economic conditions. The world economy was relatively stable for much of Trump’s term, at least until the pandemic. When the rest of the world is doing okay, it generally helps U.S. markets. It’s not just about what’s happening in the U.S.; we’re all connected, like a giant, sometimes chaotic, global family.
And what about investor confidence? Trump’s rhetoric was often… boisterous. Some investors might have found that exciting, a sign of strong leadership. Others might have found it… unsettling. That uncertainty we talked about with the trade wars? That can mess with confidence big time. People are less likely to put their money into risky investments if they’re not sure what’s going to happen next.
So, to circle back to the original question: was the stock market better under Trump? If you look purely at the returns of major indexes, then yes, it was a pretty good period. You saw significant growth. Your portfolio probably looked healthier than it did for a while.
However, it’s crucial to acknowledge the role of factors outside of any single president’s direct control. The economy was already improving. The pandemic, a massive global event, had a huge impact, both negative and then positive due to stimulus. The Federal Reserve’s actions are also a major player, independent of the White House.
And then there are the underlying policies. Were the tax cuts sustainable? Did the trade wars do more harm than good in the long run? These are debates that economists and historians will be having for years. It’s not as simple as looking at a chart and saying, “Yup, that was the best.”
Ultimately, the stock market is a complex beast. It’s influenced by so many things: corporate earnings, interest rates, global events, investor sentiment, government policies, and even just the daily news cycle. So, while the numbers might look good for the Trump years, attributing all of that solely to his presidency would be like saying a chef is solely responsible for a great meal when they’ve got an amazing team and fresh ingredients delivered daily.
It’s a conversation worth having, though, isn’t it? Because understanding these things helps us make better decisions about our own finances and understand the forces shaping our world. So, next time someone asks, you can say, “Well, it’s a little more complicated than that, let me tell you…” and then you can share all the juicy details you just learned. Cheers to informed opinions and maybe, just maybe, a little extra cash in our pockets, no matter who’s in office.