Market returns vary considerably over presidential terms
Market Returns Across U.S. Presidential Terms
Stock market returns show significant variation across different presidential terms. Although the president’s policies may influence short-term market direction and sector performance, a wide range of factors—especially economic trends, monetary policy, and global events—drive overall market outcomes. Nevertheless, notable patterns and differences have emerged in market performance during and around presidential terms.
Average
Stock Market Returns by Presidential Term
|
President |
Years
in Office |
Avg.
Annual S&P 500 Return |
|
Barack
Obama |
2009–2017 |
12.8% |
|
Donald
Trump (1st term) |
2017–2021 |
13.6% |
|
Joe
Biden |
2021–2025 |
11.9% |
|
Donald
Trump (2nd term)* |
2025–present |
4.6%
(early tenure) |
|
Bill
Clinton |
1993–2001 |
15.2% |
|
Ronald
Reagan |
1981–1989 |
10.2% |
|
Franklin
D. Roosevelt |
1933–1945 |
6.2% |
|
John
F. Kennedy |
1961–1963 |
6.5% |
|
Lyndon
B. Johnson |
1963–1969 |
7.7% |
|
Harry
Truman |
1945–1953 |
8.1% |
*Returns for Trump's second term are estimates as of July 2025.
Year-by-Year
and Cycle Patterns
- Election years:
On average, annual S&P 500 returns during election years since 1980
have been positive but slightly below the long-term average—about 7.1% for
large-cap equities, while the overall average since 1979 is closer to 12%.
- Presidential election cycle: The third year of a presidential term historically delivers the strongest stock market returns, with an average S&P 500 gain of over 17% (1950–2023), while the second year is typically the weakest, and election years (the fourth year) are usually below the 10% long-term average but still mostly positive.
Volatility
and Market Drivers
- Short-term volatility tends to be higher in the months
leading up to an election, reflecting investor uncertainty about future
policy direction. After elections, volatility often subsides as
markets gain clarity on the economic outlook and likely policy direction.
- Long-term market performance typically correlates more strongly with economic growth, interest rates, and global events than with any single president or party’s agenda.
Notable
Trends
- Market returns during presidential terms are not
strongly determined by party: investors have generally fared well under
both Democratic and Republican presidents in recent decades, with
annualized S&P 500 returns between 11% and 14% in the last three
presidencies (Obama, Trump, and Biden).
- Policy changes—such as trade tariffs or tax cuts—can
spark short-term market rallies or pullbacks, but these effects are often
swamped by broader macroeconomic trends.
- Poor performances during presidential terms are frequently linked to major economic crises (e.g., the Great Depression, the 2008 financial crisis or the 2020 pandemic), not just political events.
Key
Takeaways
- Stock market returns do vary considerably by
presidential term, but
these returns reflect a complex interplay of politics, economics, and
global events.
- Most election years yield positive market returns,
though typically a bit lower than non-election years, largely due to
uncertainty.
- The third year of a presidential term has historically
provided the highest average returns, while the second is often the
weakest.
- Over extended periods, investors who remain focused on long-term economic fundamentals, rather than election-driven timing, have tended to experience solid growth.
N.
Russell Wayne
Weston, CT 06883
203-895-8877
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