By Casey Bond
President Donald Trump has repeatedly warned that the stock market is doomed if he loses the 2020 election and Democrats take the White House. But looking at history, the association of a Republican president with better stock market performance is not steeped in reality.
Here’s what’s really the case: Historically, the stock market performs better under Democrats. Even if you exclude the Great Recession and COVID-19 pandemic ― both of which occurred while a Republican was in office ― the data still shows stronger performance when Democrats occupied the White House.
That may be due to the conventional economic policies of the two parties; Republicans tend to stimulate the economy via tax cuts and business deregulation, while Democrats tend to stimulate the economy via wealth redistribution policies, including increased taxes and government spending.
“Corporate and income tax cuts tend to have a muted immediate effect on the economy, [while] government spending on items such as infrastructure, unemployment benefits and food stamps tends to have a greater impact,” explained Stuart Blair, a chartered alternative investment analyst and director of research for financial services firm Canterbury Consulting.
On the other hand, he said, it could be argued that the policies enacted by Republican administrations yield longer-term benefits that boost the economy for their successors.