I have been up in New Hampshire this week, checking out some
of the Democratic presidential candidates, and along the same
lines I thought I’d examine the performance of the market the
first year following an election. [Previously, I have covered the
two years prior to one.]
Below you’ll find the return on the S&P 500, the inflation rate
(as measured by the consumer price index), and the ‘trend’ in
inflation. Specifically, regarding this last item, I’m looking at
the difference between the CPI in an election year and the
inflation rate the following year. For example, 2% to 3% is an
‘up’.
Of course the performance of the market is normally adversely
impacted in times of high inflation and, generally, vice versa.
Just something to keep in mind as more than a few pundits predict
much higher inflation rates than currently exist down the road.
……………..S&P 500…CPI……Trend
2005…………..?…………..?…………..?
2001……….. -11.9……. +1.6……..down
1997……….. +33.4….. +1.7……down
1993……….. +10.0….. +2.8……down
1989……….. +31.5….. +4.7……..up
1985……….. +32.2….. +3.8……down
1981………… -4.9…… +8.9……down
1977………… -7.2…… +6.8…….up
1973………… -14.7….. +8.8…….up
1969………… -8.5…… +6.1…….up
1965………… +12.5…. +1.9…….up
1961………… +26.9…. +0.7……down
1957………… -10.8….. +3.0……..up
1953………… -1.0…… +0.6…….down
1949………… +18.8…. -1.8…….down
1945………… +36.4…. +2.3……..up
1941………… -11.6….. +9.7…….up
1937………… -35.0…. +3.1……..up
1933………… +54.0… +0.5……..up
1929………… -8.4…… +0.2……..up
Notes:
–Yes, the CPI was down in 1949.
–There was significant deflation for the period 1930-32.
[Source: Ibbotson Associates Yearbook]
Wall Street History will return February 6.
Brian Trumbore
