When President Obama is sworn in at noon tomorrow, there is one number he can point to — besides the temperature — that will show an improvement since his first inauguration day four years ago.
Although the size of the national debt has swelled a staggering 54 percent under his presidential watch and average household income has dropped for the first time ever during a recovery, Wall Street, as measured by the time-honored Dow Jones industrial average, has taken off by a lofty 68 percent.
Unfortunately, just as second presidential terms are historically rockier than the first, the stock market is shaping up to be less hospitable to the White House than during Obama’s first four years. Here’s why:
First off, the bull market is long in the tooth by historical standards in terms of both time and performance. When Obama puts his hand on the Lincoln Bible tomorrow, Wall Street’s bull run will be in its 47th month. According to Jim Stack of InvesTech Research, the average length of a bull market, going all the way back to 1930, is 3.8 years, so the rally is running on borrowed time.
Meanwhile, consumer confidence has begun to falter once again. On Friday, the University of Michigan’s overall index of consumer sentiment came in at 71.3 — the lowest reading since December 2011.
The market has also yet to see the impact of the New Year’s tax hikes on the economy. Factoring in higher rates on the affluent and on capital gains, plus the ObamaCare taxes and the 2 percentage point hike in Social Security rates, Hoisington Investment Management reports that the 2013 tax hikes are on a par with the hikes that Franklin D. Roosevelt initiated in his second term in 1937.
As Americans watch our 44th president takes the oath of office, the 75 percent who own few stocks or none at all will likely not be better off financially than they were four years ago. Years of frantic money-printing by the Fed have managed to juice up stock prices dramatically but have done little else in the private sector to spread the wealth.
The challenge now for the president is to find a way to spur true growth across the economy — growth that creates jobs and pads paychecks, not just portfolios. Unfortunately, early indications suggest he’s making all the wrong moves.