The Dow Jones Industrial Average will start trading today at a four-year high and about 50 points away from the psychologically important level of 13,000. Especially with the news this morning of a $170 billion Greece bailout, the Dow could easily set a new high today.
Similarly, the S&P 500 has gained more than 8 percent so far this year, and the index has already erased most of the losses sustained since June 2008. The NASDAQ is nearing its highest level in a decade.
These generally reassuring trends pose a tough challenge for Republican political strategists and presidential hopefuls who do not want to let Obama claim any credit for this recovery. They have to find a way to counter the fact that, under Obama, the Dow has soared by more than 60 percent so far.
These are the same strategists who blamed Obama for the Great Recession before Bush even exited the White House. At that time, the Republican elite — Karl Rove, Mitt Romney, and John Boehner — argued that the recession constituted an indictment of Obama’s economic policies. There was no doubt about the causal relationship between the President in power and the state of the market.
We’ll see how these people try to invert their own logic this week. Some of them have already started. Dick Morris, for example, claims that the gains in the stock market are just one part of “Obama’s phony recovery.” Does he mean that Obama somehow falsified the Dow trading data? That’s what the word “phony” would imply, right? Apparently, Morris is simply saying that stock market trends don’t mean much these days.
To be fair, Dick Morris and his fellow propagandists are not completely wrong. Indeed, capital markets are increasingly divorced from the real economy and real public sentiment. But these people are deeply disingenuous. In 2009, they assured us that the declines on Wall Street reflected Obama’s failures, but they won’t attribute three years of gains to Obama’s successes.
Setting aside the partisan hypocrisy, the relationship between stock market performance and presidential leadership remains a complex analytical challenge. I’m not sure how much this matters, but there’s some evidence that the stock market performs better, if not much better, under Democratic administrations.
Also, here’s a graph I put together based on a Daily Kos model updated with the DJIA close last Friday.