The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Stock Market Analysis: Bush vs. Obama Stimulus Plans

Posted by iusbvision on July 12, 2009

BizBlogger:

Now that 6 months have passed since Obama’s “stimulus plan” has passed, I thought it useful to examine the stock market reaction to Obama’s plan and compare it to the reaction of President Bush’s 2003 stimulus plan.

Bush’s plan passed in April 2003 while Obama’s passed in February 2009. I chose the S&P 500 Index starting point one month prior to passage because the market typically discounts the information beforehand as the bills work their way through Congress. I chose 6 months-post passage as the ending point because that’s all the data we have for Obama’s plan so far.

Bush: From March 2003 to October 2003, the S&P 500 went from 835 to 1034 or +23.8%.

Obama: From January 2009 through July 2009, the S&P went from 932 to 879 or -5.2%.

By way of comparison, I also reviewed the market returns a full year prior to these time periods and the results show a very similar situation.

The S&P 500 return under Bush 1-year prior was -26.2%, hurt by the internet bubble collapse, 9/11 and corporate scandals. Trillions of dollars in lost wealth.

The S&P 500 return under Obama 1-year prior was -35.9%, hurt by the housing bubble collapse. Also trillions of dollars in lost wealth.

Both presidents had very similar economic challenges, but the difference in market confidence inspired by the two stimulus plans couldn’t be more stark.

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