Presidential Debate Week; Political Considerations

 

We are entering the "spin zone" leading up to the Presidential Election.

With the first Presidential debate on Thursday this week, in my opinion, we've already entered the 'spin zone' of political truths, lies and misrepresentations this election season. While I try to stay politically neutral with my posts the past 18 years doing this, I'll focus on four areas of our economy that are super-important to our lifestyles, investing, home buying, inflation, and gasoline prices. You decide if this information is important to you.

What prompted this was a post on Facebook from a connection there that stated the stock market had done extremely well under the Biden administration. Generally, most market watchers would look at this and say, SURE, stock prices are trading at record highs, so we're doing rather well here the past 3-1/2 years. That begs the question then, RATHER WELL vs. what?

Reading between the lines, this Facebook post was comparing Biden's stock market to Donald Trump's stock market performance. No stats were offered by the author that I could fact check.

I offered a short reply comparison using the inauguration dates of the two President's; That would be fair, right? Under your reign, you're responsible - good or bad - for the results.

Here's my analysis. Biden Admistration: Dow Jones 30,930 to 40,000 now (I'm using the high close on 5/17/24 as the post author alluded to). So next we calculate the average annual compound growth rate, since 4 years of Trump's reign can't compare accurately to the shorter time that Biden's logged in office thus far.

Trump's stock market (Dow Jones Industrial Average) started at 19,732 to 30,930, ending at Biden's inauguration. Biden's market was from Dow 30,930 to 40,000.

The Results:  Biden, average compound annual growth rate:    +8.03%
                      Trump, average compound annual growth rate: +11.90%

That's quite a difference, and a lot of ground to make up for Biden in the next 7 months! The Dow would need a 48,480 level to achieve parity with Trump.

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HOME BUYING

Mortgage rates have soared the past 2-1/2 years, after the Federal Reserve started raising interest rates in early 2022 to curb inflation; 11 hikes in total. The mortgage rate tally:

30 Year Fixed Mortgage Rate at end of Trump's presidency:  2.95%

30 Year Fixed Mortgage Rate today under President Biden:   6.94%

Source: Mortgage Bankers Association, data as of 6/14/24.

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 INFLATION (Consumer Prices)

This really afffects all American's hard. Inflation totaled +7.72% under Trump's 4 years in office. As you can see by the graph of inflation below, inflation almost immediately rocketed up starting in early 2021. 

 

 

 

 

The starting inflation under the Biden administration ramped up higher than all four years under Trump in the 13th month of Biden's Presidency.

Total inflation thus far under Pres. Biden: +19.86% (through the 40 months reported thus far; using May '24 reporting data).

Source: U.S. Bureau of Labor Statistics; www.bls.gov

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GASOLINE

One commentator on the cable news channel stated that one indicator that would resonate with voters would be the price of gas on Memorial Day, the un-official start to the Summer travel season. So I looked it up over the 8 Memorial Day's under both Presidents.

TRUMP'S Memorial Day gas prices (futures market prices, without taxes).
2017 - 2020;  $1.57,  $2.14,  $1.80,  $1.03

BIDEN'S
2021 - 2024; $2.21,  $4.02,  $2.43,  $2.49

Of note: Under Trump, the 2020 Covid-19 Pandemic caused gas prices to plummet; $1.03 wholesale. Likewise, when demand picked up, and Biden's U.S. energy policy became restrictive, prices soared, $2.21 and $4.02 on Memorial Day's 2021-2022. Biden's Memorial Day gas prices were never lower than Trump's, and overall the Biden-era prices were +60-70% more under Biden.

I realize this is not entirely statistically scientific using just 8 data points, but I think you get the idea here on the general trend in gas prices.

Whether conservative or liberal, Democrat of Republican, there's certainly other factors and stats that would favor one side over the other. Let me know of others that I have missed. Watch the first Presidential Debate on Thursday, June 27th.

Have a safe Summer!

~Barry