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Twice as Bad as Hoover
July 23, 2002

George W. Bush is shattering records for the worst first 18 months in office for a U.S. president as measured by the benchmark Standard & Poor’s 500. In his first year-and-a-half in the White House, Bush presided over a 36.9 percent decline, almost twice the percentage drop of Herbert Hoover, the president who led the nation into the Depression.

Hoover recorded an 18.6 percent decline and now ranks third from the worst, with Richard Nixon in second place with a 23.6 percent fall in his first 18 months. In other words, in the 75-year existence of the S&P 500, no president has seen the stock market index fall as much as one-quarter, before Bush’s decline of more than one-third.

Ironically, given the Republicans’ business-friendly reputation, the four worst performing stock-market presidents in the first 18 months are all Republicans. Ronald Reagan’s 15.3 percent decline joins Hoover, Nixon and Bush at the bottom. The top two performing presidents, as measured by the S&P in their first 18 months, are Democrats, Lyndon Johnson at a plus 27.5 percent and Franklin Roosevelt at 55.1 percent.

Bill Clinton ranked sixth with a 4.2 percent gain in his first 18 months.

While almost doubling Hoover’s decline in the S&P, Bush trailed the Depression-Era Republican slightly in the blue-chip Dow Jones Industrial Average, which measures the performance of 30 top U.S. companies. In Hoover’s first 18 months, the Dow fell 24.8 percent. In Bush’s 18 months, the Dow’s drop was 24.3 percent. [NYT, July 22, 2002]

Though some presidents reversed the early returns of the stock markets, Bush has so far failed to inspire confidence either with his personal performance or his policies. The stock market has greeted speech after speech by Bush with double-digit declines in the Dow.

Accelerating Pace

The pace of the stock market crash under Bush also is accelerating. In the 10 trading days since Bush visited Wall Street to promote his economic plans, the Dow has dropped almost 1,500 points or 16 percent. [NYT, July 23, 2002]

The Bush speeches have done little to persuade investors that happy days are here again – or for that matter, likely in the foreseeable future. Bush’s top economic proposals speak to different conditions than are apparent today.

His demand for a permanent repeal of the inheritance or “death” tax had more appeal to Americans who were watching their stock portfolios swell in the Clinton Era, along with their inflated dreams of multi-million-dollar wealth to pass on to their descendants. Now, after a battering of their net worth, many of these Americans are simply hoping to have enough money to pay for a modest retirement.

Fast-track trade agreements also are out of sync with a world far less enamored of U.S. economic leadership. Further, deregulation of industry and tort reform -- backed by Bush and Republicans in Congress -- have helped unleash some of the avarice that led to corporate collapses at Enron Corp., WorldCom Inc. and other companies.

Missing from Bush’s economic plan is any initiative that can inspire Wall Street with visions of economic expansion. By contrast, the Clinton-Gore administration promoted technological advances like the Internet that created a framework for the private sector to innovate. In Election 2000, Vice President Al Gore also proposed a partnership between government and industry to develop environmentally friendly vehicles and alternative energy sources, in part, to prime the pump for economic growth.

Major stock indexes are Wall Street’s rough measures of expected business growth. At least during George W. Bush’s first 18 months, investors are judging that those expectations are lacking – on a historic scale.

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