Saturday, July 11, 2009

Bush vs. Obama Stimulus Plans

An interesting comparison of the effects of Bush and Obama stimulus plans. It also looks at the economic condition preceding the stimulus plan.

"Bush: From March 2003 to October 2003, the S&P 500 went from 835 to 1034 or +23.8%.

Obama: From January 2009 through July 2009, the S&P went from 932 to 879 or -5.2%.

By way of comparison, I also reviewed the market returns a full year prior to these time periods and the results show a very similar situation.

The S&P 500 return under Bush 1-year prior was -26.2%, hurt by the internet bubble collapse, 9/11 and corporate scandals. Trillions of dollars in lost wealth.

The S&P 500 return under Obama 1-year prior was -35.9%, hurt by the housing bubble collapse. Also trillions of dollars in lost wealth.

Both presidents had very similar economic challenges, but the difference in market confidence inspired by the two stimulus plans couldn't be more stark. The market discounted that Bush's plans would return the economy to strong growth, while the market is discounting that Obama's plans will do nothing or even harm the economy's growth.

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