In our previous article Has The Barack Obama Presidency Been Driven By Market Dynamics?, we posited that activities in the marketplace, which has been reflective of present and future economic dimensions, may have served as an important psychological driving force to voter selection during elections.
Apparently, we learned that this hasn’t been the first time.
According to the Economist, ``ONLY twice since the 1920s has economic angst played such an important role in a presidential election—and both the previous occasions make imperfect templates. When Franklin Roosevelt defeated Herbert Hoover in 1932, the Depression had been going on for three years, thousands of banks had failed and unemployment was 25%. When Ronald Reagan beat Jimmy Carter in 1980, inflation had been high for years, hovering at 12% as voters headed to the polls. By contrast, the crisis facing Barack Obama has been underway for just over year, with unemployment standing at 6.5% according to figures published on November 7th.” (underscore mine)Let us take a look at how the markets performed during the aforementioned periods.
The Dow Jones Industrials prior to the FDR-Hoover 1932 Presidential elections
Chart courtesy of Chartsrus.com
The S&P 500 prior to the Reagan-Carter 1980 Presidential Elections
Chart courtesy of chartrus.com
As Charles Kindleberger wrote in Manias, Panics and Crashes A History of Financial Crises ``For historians each event is unique. Economics, however, maintains that forces in society and nature behave in repetitive ways. History is particular; economics is general."
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