An argument can be made that it really doesn’t matter who’s in the White House when it comes to the economy. After all, it’s the Federal Reserve’s economy to run.
But don’t buy it.
Indeed, the Fed gives the economy a jolt. As the nation’s central bank, it “prints money” or buys securities in the market. When banks are flush with cash, interest rates are lower and businesses borrow more cheaply and expand hiring. Average people also borrow more easily; the stock market takes off; and investors buy stocks. All of this happened during the past eight years under President Obama. The economy recovered from the 2008 financial crisis and the stock market soared to record highs.
But the reality is much more complicated. An unemployment rate of 5% is usually a great thing. But the stats show that the unemployment rates have dropped in large part because so many people have dropped out of the workforce. Meanwhile, the Obama administration imposed massive regulations on business, and countless small businesses escaped Obamacare health insurance mandates by keeping their hiring low. Don’t forget his rigid tax policy, either.
As for the stock market, the rise without a true economy recovery means people are buying stocks not because they believe the economy and corporate earnings are expanding, but because there’s nowhere else to put their money. That means we could be in the middle of the mother of all stock market bubbles, which never ends well.
Hillary Clinton promises to expand Obamacare and raise taxes. Her GOP challenger, Donald Trump, says he’ll tamp down Obamacare mandates and lower taxes on individuals and businesses.
But Trump may also incite a trade war by imposing tariffs on foreign goods—that’s never a good thing for the economy, either.
So, yes, presidents do matter.
Charles Gasparino is a Senior Correspondent at Fox Business Network and a columnist for Men's Fitness. Follow him on Twitter.