Wall Street History

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Wall Street History

01/23/2004

What Comes After?

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

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