March 2, 2009

The Dow Jones drops again

Dow Jones Industrial Averages over the last decade have been an interesting study. The closing average when Bush became President elect, November 3rd 2000 was 10,817.95 Bush had inherited a mounting recession and by the time he took office it had already dropped 230 points.

In the November following the 9/11 attacks it had dropped to 9300 (November 2nd - 9,323.54). By the 2004 it had regained some momentum closing on November 4th at 10,314.76, and by August 29th, 2007 it had reached 13,289. The Bush Presidency had seen a 22.8% growth over 7 years, or an average growth of 3.26% at that point. Those are respectable numbers in the face of a recession, 9/11, two wars and Hurricane Katrina. But the recession had already started and by August 29th 2008 it had sunk to 11,543.96. Despite a recession being underway, the market is off by 13.11% in the year, but still up over the Bush tenure by 6.7%, or an average of 0.8% per year.

Which brings us to the Obama time frame. The closing price on November 4th 2008 was 9,625.28. For the record, the Bush Presidency closed the DJIA down 11%. Obama, now President elect, begins talking about the economy and his plans for America. He has impacted the direction of the market. By Obama's inauguration January 20th 2009 the Dow closed at 7,949.09. Between Obama's election and inauguration, the DJIA down 17.4%. Is this all Obama's fault? No. Did he contribute to the sell off? Absolutely.

The closing closing price today - 6763.29. Since Obama's inauguration the market is down 14.9%. Or since he became President elect and Chris Matthews decided that Obama was already in charge and Bush should resign, it has dropped a whopping 29.7%. That is indeed bad news for America.

Bush dropped the market 1192.67 over 8 years. Obama has managed to drop it by 1185.8 in 6 weeks since his inauguration. That is a precipitous fall. President Obama talked about drastic action being required urgently - being required now. That action, as far as the Dow Jones Average is concerned, has not produced any positive immediate results. Of course, I don't recall him mentioning immediate results. But he definitely mentioned urgent several times.

What does this mean? Not much actually, 6 weeks is a very short window to view the prism of economic impact of the Presidency. And to be sure, the DJIA is not beholden to only presidential proclamation. There are many factors in play. However, for all the fierce urgency of now stuff, the market is reacting in a roughly uni-directional way; downward. The President has done nothing to stop the slide in any major way because his solutions are not the solutions the market requires. Then again, perhaps the slide in numbers the President is concerned with is not the Dow, but rather Gallup's presidential approval ratings.

No comments:

Post a Comment

Disagreement is always welcome. Please remain civil. Vulgar or disrespectful comments towards anyone will be removed.

Related Posts Plugin for WordPress, Blogger...

Share This