Contrary to what Mitt Romney and many on Wall Street predicted, the stock market is booming in President Obama's second term.
The Standard & Poor's 500-stock index, the broadest measure of the U.S. stock market, is up 24 percent so far this year, Bloomberg pointed out on Monday. If the market keeps this up, it will be the best performance in the first year of a president's second term since 1997, the year after President Clinton's re-election, when the S&P rose 31 percent. The only other second-term gain that tops it is 1985, when the market celebrated President Reagan's re-election with a 26-percent rally.
In fact, the S&P 500 is up 108 percent since the day Obama took office on Jan. 20, 2009, making him only the fifth president since the Great Depression to enjoy a stock-market doubling. Of that small group of lucky presidents, Obama has the best average yearly percentage return, according to the New York Times' Floyd Norris.
It certainly helped that Obama took office in the midst of the worst financial crisis since the Depression, when the stock market was near rock-bottom, with few other places to go but up. The Federal Reserve deserves some credit, too, for keeping its key short-term interest rate pegged near zero for Obama's entire term, while pumping cash into financial markets to help the economy.
Still, though Obama is often derided on the right as some kind of socialist, businesses have actually done quite well during his presidency. Corporate profits have nearly tripled, soaring to record highs relative to the size of the economy. Even the banking sector that often paints Obama as a villain has enjoyed record profits.
Romney, Obama's Republican challenger for the presidency in 2012, warned during that same dinner where he trash-talked 47 percent of Americans that a second Obama term could be bad news for the stock market:
"If it looks like I'm going to win, the markets will be happy," he said. "If it looks like the president's going to win, the markets should not be terribly happy."
He wasn't alone: Some Wall Street analysts made similar predictions, calling for a "Romney Rally" and warning of a new bear market in stocks if Obama were re-elected. Even at the time this idea seemed pretty ridiculous: The stock market was climbing steadily even as Obama consistently led Romney in the polls. Though Wall Streeters tend to be conservative, stock prices are bipartisan, climbing under both Democrats and Republicans.
And stock prices have kept right on climbing since Obama's re-election. In fact, as Bloomberg and the Wall Street Journal's E.S. Browning point out, the one thing that could spoil the stock market's party at this point is its own success: With the bull market nearly five years old and mom-and-pop investors finally returning to stocks in force, the market could be due for a break.
Still, even if the market falls next year, it will have two more years to rebound before the next president takes office.