President Biden has been talking a lot about inflation, making sure Americans know he feels their pain. “Inflation is sapping the strength of a lot of families,” Biden said at a union gathering in Philadelphia on June 14. “Jobs are back, but prices are still too high. COVID is down, but gas prices are up. Our work isn’t done.”
Biden has the tricky challenge of acknowledging problems in the economy while remaining upbeat about the outlook. But that doesn’t seem to extend to stock investors who are taking a beating at the moment, with the S&P 500 index down 24% from its January high and the NASDAQ off a dizzying 33% from its high last November.
Biden rarely mentions the stock market, unless somebody asks him about it publicly. Last September, when stocks were still going strong, Biden said at a White House event, “The stock market has gone up exponentially since I’ve been president. You haven’t heard me say a word about it.”
He said another word about it on Jan. 7 of this year, when he boasted that the stock market “has hit record after record and record on my watch.”
Three weeks later, as stocks were starting to swoon, a reporter asked then-White House Press Secretary Jen Psaki if Biden was concerned. “Unlike his predecessor,” Psaki said, “the president does not look at the stock market as a means by which to judge the economy. Our measure of success is how real working families are doing.”
Last month, with the selloff intensifying, the new White House spokesperson, Karine Jean-Pierre, said, “Nothing has changed on how we see the stock market. That’s not something that we keep an eye on every day.”
By June 13—when all of the stock market gains since Biden took office were gone, and then some—the White House sounded slightly more concerned.
“We know families are concerned about inflation and the stock market,” Jean-Pierre said. “That is something the president is really aware of.”
‘The reason our stock market is so successful is because of me’
The obvious contrast is with President Trump, who frequently took credit when stocks were up and also weighed in when stocks were down. During the first year of his presidency, Trump tweeted about the stock market dozens of times. In November of his first year, Trump declared, “The reason our stock market is so successful is because of me.”
Trump was a tireless bull, at least while he was in office. During a selloff at the end of 2018, Trump advised that it was “really a great opportunity to buy.” He issued another buy recommendation in February of 2020, just as stocks were entering a short-lived bear market. Trump’s outlook changed, however, once he was no longer there to power stocks upward. He said many times during the 2020 election that the stock market would crash if voters elected Biden, and he has reiterated that lately.
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The market didn’t crash after Biden’s election. It rose for more than a year and peaked on Jan. 3, 2022. But Biden critics / Trump backers are now arguing Trump was correct, even though bear markets are a normal occurrence and something probably had to give after extraordinary amounts of fiscal and monetary stimulus produced an “everything bubble.”
The risk for any president taking credit for rising stocks is that stocks also fall, and what do you say then? Biden has another beef with Trump, which he expressed in a June 16 interview with the Associated Press. “The biggest thing, when I came into this job, that I have the greatest frustration with the last four years, is that everything was constructed and built and arranged in order for the top 1 to 3% of the population to do very well. Literally everything else seemed to be an afterthought.”
Biden has clearly tried to focus more on middle- and lower-income Americans, through his appeal to labor unions; his focus on affordable housing; and his call for higher taxes on businesses and the wealthy. But stocks aren’t just for the wealthy. More than half of Americans own stocks, mostly in 401(k) plans and other types of retirement accounts. Bear markets may even unnerve retail investors more than professionals, since typical workers don’t normally have hedging strategies or sophisticated ways of profiting on declines.
The good news for longer-term investors is that stocks went on an epic tear starting in 2009, due at least in part to extensive help from the Federal Reserve, which had way more to do with rising asset values than Trump or any other president. Anyone looking at their returns over a 5-year period or longer can still feel pretty good. Americans’ finances remain in good shape overall, so it’s not as if a bear market in stocks will bring down the whole economy.
But Americans’ sense of well-being also depends on whether they’re gaining or losing wealth, and getting ahead or falling behind. Stock portfolios contribute to the “wealth effect,” which makes people feel prosperous and confident and comfortable spending money. In that respect, the current bear market is undoubtedly contributing to slumping confidence, which in turn has pushed Biden’s approval ratings to the lowest levels of his term, so far.
Should Biden show some sympathy for stock-market investors? It’s hard to see how it could hurt. Biden may worry that stockless Americans will think he’s coddling elites, while overlooking workers having trouble filling their pickup trucks with gas. But a lot of people worried about inflation are bummed about slumping stocks, as well. One problem doesn’t exclude the other.
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