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DJIA and Jobs Trend

Economy HeartbeatJust reminder of the long-term Dow Jones Industrial Average trend line for the last ten years:

dow-jones-industrial-average-last-10-years-2017-08-05-macrotrends

Source

While I will admit I expected the markets to be less happy with the unpredictable nature of the Trump administration, I suppose a policy environment with little threat of change due to the inability of Congress and the President to act creates its own kind of stability. Apart from exiting TPP negotiations and some executive orders about regulations, I am not sure that the President can point to any actual policies that could be considered responsible for the continuation of a long-term trend in the stock market. Sure, there are some promises of tax cuts, but no one could look at the recent repeal and replace efforts and be confident that tax reform is coming quickly and easily.  Indeed, the current economic parameters are basically a continuation from the previous administration.

This is likewise true of the jobs numbers:

unemployment 10 yr

Source

That the president is taking credit is wholly reasonable and normal (indeed, it may be one of the more normal behaviors we have seen out of this White House).  However, a dispassionate viewing of the situation shows a continuation of a very long term trend, making it very difficult to actually credit any of the president’s policies (such as they are). I will go a step further and note that regardless of policy linkages, presidents tend to get credit (and blame) based on these kinds of metrics.

I found all of this intriguing in the context of Chris Stirewalt’s Fox News Halftime Report:

WOULD YOU EVEN CARE IF HE WAS GUILTY?
The stock market is up, unemployment is down and the economy seems to be picking up some steam. The streets are mostly safe, the nation is mostly secure and the world is mostly at peace.

So does it matter to you whether or not the president is a crook? The answer for a lot of Americans may be no.

With the revelation that a grand jury is looking at evidence against members of President Trump‘s 2016 campaign team, we move closer still to the possibility that someone could be in very big trouble.

Special Counsel Robert Mueller and his squad are moving fast, and the likelihood that some charges will be brought can no longer be ignored. It is not hard to imagine a moment in the very near future where some associate of the president is in the dock, charged with misdeeds relating to Russian interference in the 2016 election.

But, again, we ask: Would it matter to you?

Democrats are now in something of the same position as Bob Dole was in 1996 when he demanded of reporters about then-President Bill Clinton, “Where’s the outrage?”

My very first reaction is that while this bit of commentary makes it all about the metrics, the reality is that Obama had the same trends as Trump is experiencing, and therefore there is a clear partisan variable to be taken into consideration here.  And, by the same token, Democrats aren’t falling in love with Trump because of Dow 22k.

As such, and given Stirewalt’s audience, I think the more accurate question is, will Republicans Even Care if He is Guilty?  One wonders (and concludes that it is likely a huge percentage won’t).

The piece mostly goes on to make comparisons to the Clinton impeachment. Without analyzing the totality of the piece, I will agree that part of the reason that Clinton was able to survive his scandal and his impeachment by the House is that general public opinion was favorable to him and much of that was due to the economy.  Note the following from a 1998 Gallup story:

Despite the fact that he is only the second President in U.S. history to be impeached by the House of Representatives, President Bill Clinton received a 73% job approval rating from the American public this past weekend, the highest rating of his administration, and one of the higher job approval ratings given any president since the mid-1960s.

The 73% rating, based on a Gallup poll conducted December 19-20, came at the end of one of the most eventful weeks in recent American history. Not only did the House convene to debate and then pass two of four articles of impeachment against the President, but the week also saw an intensive four-day U.S. and British air attack against Iraq and its leader, Saddam Hussein.

Both of these two events most probably had an impact on the spike in Clinton’s job evaluation. Even though Clinton’s job approval ratings have been high all year, the weekend’s 73% rating marked a 10 percentage point increase from a survey conducted Tuesday and Wednesday of last week, which partially overlapped the beginning of the Iraq attack, and a 9% increase from a poll conducted the previous weekend. The 73% figure is also about 7-8 percentage points higher than the ratings Clinton received in a number of polls taken throughout most of October and November.

A deeper dive into Clinton’s approval numbers can be found here:  Presidential Job Approval: Bill Clinton’s High Ratings in the Midst of Crisis, 1998

Let’s compare those numbers to Trump’s via Rasmussen yesterday (and I pick Rasmussen because it tends to be the most favorable poll to Trump):

The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 39% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-nine percent (59%) disapprove.

The latest figures for Trump include 25% who Strongly Approve of the way Trump is performing and 49% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -24.

And since this post focuses heavily on trends, it should be noted that the trend line for Trump’s approval is downward, even in the Rasmussen poll.

So:  39% v. 73% (and Clinton’s number was after a year-long scandal and in the midst of actual impeachment proceedings).  The circumstances of the two presidents could not be more different. A key element of the Clinton v. Trump comparison that Stirewalt misses is that Clinton was able to garner support from Democrats and a large percentage of Republicans (he was scoring 81% favorability in regards to his handling of the economy at the time).  Trump, meanwhile, is well underwater in his approval numbers and is struggling just to get Republicans to all agree that he is doing a good job.

Interestingly, the support for Clinton’s impeachment and removal are close to Trump’s current approval numbers (with Trump being more popular than removal of Clinton).  From CNN in 1999:

Do you want your senators to vote in favor of convicting President Clinton and removing him from office?

Yes    32%
No     63

It would be interesting to see a deeper comparative study of public opinion on these issues, but what does sort of leap out is that there was core of Republicans who wanted Clinton removed and a core that now supports Trump.  One suspects there is some significant overlap on the characteristics of those two groups.

Beyond that, Stirewalt is incorrect that the Clinton and Trump circumstances are as similar as he thinks they are because Clinton had broad support in 1998/1999 and Trump currently does not (and is unlikely to get it). Some of that is the nature of Trump’s presidency but in fairness part of it is that despite the positive trends noted above, the reality is that there still remains a substantial amount of anxiety over the economy–something that Trump share with Obama, along with the positive trend lines.

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About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Andy says:

    Often said but frequently ignored is the simple fact that Presidents are not Captains of the economy and their actual ability change trends is very limited.

    One could argue the Dow is doing so well because of a general financialization of the economy which has received broad support by both political parties.

    Another point Dave Schuler frequently makes at his blog is that there is still a business cycle and we are overdue for a cyclical downturn. This “recovery” is unusually long and based on past trends it’s very likely there will be business cycle recession during Trumps turn which he will, politically, have to own.

    Like or Dislike: Thumb up 1 Thumb down 0

  2. @Andy: Presidential influence is limited, although long-term policies do matter.

    And yes: these trends are unlikely to hold and I am quite concerned about how this president will react to a crisis.

    But also: what will his approval numbers look like if we do enter a correction?

    Like or Dislike: Thumb up 1 Thumb down 0

  3. James Pearce says:

    Interesting that now that Trump has been elected, this is Fox News’s story:

    “The stock market is up, unemployment is down and the economy seems to be picking up some steam. The streets are mostly safe, the nation is mostly secure and the world is mostly at peace.”

    This time last year, Trump was saying in his “what do you have to lose?” speech this:

    “You live in your poverty, your schools are no good, you have no jobs, 58 percent of your youth is unemployed” and “We will make your streets safe so when you walk down the street, you don’t get shot, which is happening now.”

    Flapping lips playing chin music.

    Like or Dislike: Thumb up 6 Thumb down 0

  4. @James Pearce: Not to mention “this American carnage”

    Like or Dislike: Thumb up 5 Thumb down 0

  5. al-Ameda says:

    What’s interesting is that while Trump is high-5-ing his base on the recent jobs numbers – an average of 179,000 jobs per month since inauguration – the average jobs count during the final 6 months of Obama’s presidency was over 190,000.

    Though it’s early, by the standard of the most recent Democratic presidency, Trump is making America slightly less great than Obama did.

    Though Republicans hate to admit it, Obama left them with an economy where most indicators were good to very good – unemployment below 5%, low inflation, DJIA up from 8,000 to over 18,000, housing markets in full recovery from the 2008-09 crash.

    Like or Dislike: Thumb up 7 Thumb down 0

  6. gVOR08 says:

    @Andy: You’re right, “Presidents are not Captains of the economy and their actual ability change trends is very limited.” However, they also don’t have zero effect.

    This link to kinsley is old, and Obama’s numbers probably pull it down a little, what with having to recover from the W collapse and all, but the conclusion holds. The economy does better with Dems in the White House than with Rs.

    Economists admit that this correlation exists, but they don’t really see any economic policy reasons this should be so. My own crank theory is that they’re looking in the wrong place. They’re looking for macro policy reasons and it may be small ball at the agencies. That and Dems seem somewhat less prone to big non-economic mistakes, like invading Iraq.

    GOPs will claim it’s because Dems spend borrowed money to stoke the economy, then Rs have to step in, take away the puchbowl, and apply fiscal discipline. Given the last few decades of history, that explanation seems laughable.

    Like or Dislike: Thumb up 6 Thumb down 0

  7. JohnMcC says:

    @gVOR08: Allowing for the variability that a large-brush-stroke analysis gives it is clear that your statement holds true for all kinds of economic measurements; my pet hobby horse is showing that the last two presidents who presented balanced, zero-deficit budgets to the House were both Democrats. Lyndon did it in ’68-69 by adding a sur-tax to pay for the War. Clinton did it several years running because he profited by the Bush Senior tax increases. (And, if I recall, his own.)

    Like or Dislike: Thumb up 1 Thumb down 0

  8. Andy says:

    @gVOR08:

    Economists admit that this correlation exists, but they don’t really see any economic policy reasons this should be so.

    That’s the problem I have with the correlation – there’s no clear explanation or evidence of causality. Plus the economy and both parties changed substantially over the years.

    Like or Dislike: Thumb up 0 Thumb down 0

  9. OzarkHillbilly says:

    Austan Goolsbee:

    “Look, we’ve had, I believe, 84 months in a row of job growth and the last six of those have been under Donald Trump,.It’s like a guy built a house and sold it to someone and that person walked in and turned the lights on and was, like, ‘Look at this house I built!’”

    ‘Nuff said.

    Like or Dislike: Thumb up 7 Thumb down 0

  10. @Andy:

    there’s no clear explanation or evidence of causality.

    If you mean the correlation of a president sitting in the office and the economy outside his door at that moment, sure,

    If we look over time, then there are clear cases in which policy choices either made or supported by presidents very much matter. As noted above, HW Bush’s willingness to sign a tax increase helped the Clinton economy. Likewise, Bush 43’s tax cuts and funding of the Iraq war by borrowing helped create some of the key conditions of the Great Recession, etc.

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  11. Hal_10000 says:

    It’s interesting, though, that both the Clinton economy and the Obama economy (and the Reagan economy for that matter) happened with the White House and Congress in opposite hands. For Reagan, it meant a Congress that forced him to raise taxes to keep the deficit under control. For Obama and Clinton, that meant spending restraint. And in all three cases, you had the additional benefit of Presidents who worked closely with the Federal Reserve to make their policies were consistent (Clinton especially). All three were also in favor of free trade.

    While I agree that Presidents have a limited impact on the economy, I do think that spending restraint, deficit control, sound monetary policy and sensible regulatory policy help. One need only look at the Great Inflation or the Bush years to see that the President’s ability to *wreck* an economy is far greater than his ability to stimulate it. I fear that Trump is trending toward that and that the Congress will be unwilling or unable to keep him in check.

    Like or Dislike: Thumb up 4 Thumb down 0

  12. @Hal_10000:

    the President’s ability to *wreck* an economy is far greater than his ability to stimulate it.

    Indeed

    Like or Dislike: Thumb up 1 Thumb down 0

  13. Barry says:

    @JohnMcC: “Clinton did it several years running because he profited by the Bush Senior tax increases. (And, if I recall, his own.)”

    Note that the right was pretty unanimous in declaring the Bush I tax increases, as well as the Clinton tax increases, were going to trash the economy.

    It was only in the late 90’s that they had to scramble to come up with alternate theories.

    Like or Dislike: Thumb up 1 Thumb down 0

  14. Andy says:

    @Steven L. Taylor:

    Sure, policy choice matters. I would add that the policy choices which matter most require legislation which means Congress and the President must act. And the effects of that legislation are often delayed especially, as has been the case in recent years, when the legislation doesn’t come into force until the future.

    All these are simply more evidence that the simplistic theory that Democratic Presidents are better for the economy is probably wrong.

    @Hal_10000:

    I agree with most of your comment, however:

    One need only look at the Great Inflation or the Bush years to see that the President’s ability to *wreck* an economy is far greater than his ability to stimulate it.

    The stuff the GWB did that are listed in this thread was all done with legislation. Bush obviously supported those policies, but he could not enact them alone. As with many things, Congress manages to avoid responsibility.

    The biggest influence Presidents have probably comes from the regulatory apparatus. Over time Congress has ceded a lot of authority to regulators. Even there though, new rules still take a couple years to develop and approve and then a couple more to implement, so there’s a time lag there as well.

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  15. Just 'nutha ig'nint cracker says:

    @Andy:

    All these are simply more evidence that the simplistic theory that Democratic Presidents are better for the economy is probably wrong.

    So, is your theory that the interpretations based on economic performance are, basically, 180 degrees out of phase, if you will allow?

    Like or Dislike: Thumb up 0 Thumb down 0

  16. Moosebreath says:

    @Barry:

    “It was only in the late 90’s that they had to scramble to come up with alternate theories.”

    Republicans have come up with economic theories other than tax cuts are the answer to whatever the question is? Since when?

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Andy says:

    @Just ‘nutha ig’nint cracker:

    So, is your theory that the interpretations based on economic performance are, basically, 180 degrees out of phase, if you will allow?

    No, I think partisan control of the Presidency is essentially a non-factor when it comes to US economic performance for all the reasons cited.

    Like or Dislike: Thumb up 0 Thumb down 0

  18. Just 'nutha ig'nint cracker says:

    @Andy: Well then you’ll have to forgive my denseness, but the pattern seems unlikely to be the effect of a random walk. I’m not inclined to give credit to Presidents or parties either, but the pattern we see needs a better explanation than “well, stuff happens.”

    Like or Dislike: Thumb up 0 Thumb down 0

  19. de stijl says:

    @Moosebreath:

    For Rs deficit reduction and spending restraint depend entirely on who is President.

    If it is a D those things are paramount and core principles. If it as a R those things do not matter. No matter the business cycle.

    Infrastructure and central bank preferred policies also vary wildly with who has the big chair.

    It’s akin to reverse Keynesianism.

    Like or Dislike: Thumb up 2 Thumb down 0

  20. Tyrell says:

    One trend that is concerning but doesn’t get addressed is the decline in the retail section. Every week brings announcement of a major store closing or reductions.
    I walk through malls where half the spaces are empty. I drive past large stores that are boarded up. Our choices of store locations keeps getting smaller. That is not good. Look at the electronics area. There used to be a lot more choices.
    Something needs to be done.

    Like or Dislike: Thumb up 0 Thumb down 0

  21. de stijl says:

    @Tyrell:

    I believe you’ve heard of the intetnet.

    Like or Dislike: Thumb up 4 Thumb down 0

  22. CB says:

    @de stijl:

    Don’t be so sure

    Like or Dislike: Thumb up 1 Thumb down 0

  23. Richard DeMent says:

    @de stijl:

    Ohhh, Sick burn.

    Like or Dislike: Thumb up 0 Thumb down 0