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U.S. Rep. Gerry Connolly, as a leader in President Barack Obama’s re-election "Truth Team," wants to right verbal wrongs on the president’s record.
In a Feb. 13 interview with on Richmond’s WWBT-TV with NBC12’s Ryan Nobles, Connolly, D-11th, claimed a series of successes for the president’s economic policies. One, in particular, caught our ear.
"We’ve doubled the stock market from where we started when he was sworn into office -- Bush had gotten it down to 6,500. It’s double that today," Connolly said.
We went to the ticker tapes to see if the stock market really has doubled since Obama’s inauguration on Jan 20, 2009. We were in deep recession then. The stock market took hits as the subprime mortgage crisis exploded. Catastrophic losses at Bear Stearns led to its sale to JPMorgan Chase in March 2008. Lehman Brothers filed for Chapter 11 bankruptcy protection that September.
We looked first at the Dow Jones Industrial Average, since that’s the index Connolly alluded to in his statement. The Dow is an average of 30 large stocks in corporations such as Exxon Mobil, General Motors, Microsoft and Wal-Mart.
The Dow opened at 8,279.63 on the morning Obama took the oath of office and closed at 12,874.04 on Feb. 13, 2012, when Connolly made his statement. That’s a 55.5 percent increase, not really close to the 100 percent increase Connolly claimed.
So how does Connolly justify his statement?
The Dow continued to plummet after Obama took office, hitting a low of 6,469.95 on March 6, 2009. It’s at this point that the Connolly camp begins measuring the stock market’s performance under Obama. The Dow increased 99 percent from that day through the day the congressman made his claim.
James Walkinshaw, Connolly’s chief of staff, said the market, until that low point, was reacting to the policies of former President George W. Bush, a Republican. He said Obama’s economic plan began to take effect with the passage of the $787 billion stimulus on Feb. 13, 2009 and was not fully in force until the recovery money began flowing out that spring.
Walkinshaw, in an email, also said the Nasdaq Composite Index -- which largely measures stocks of technology companies -- has doubled since Obama became president. Nasdaq opened at 1,520.76 on Inauguration Day and closed at 2,931.39 on the day Connolly made his claim. That’s a 92.8 percent increase -- almost a doubling.
How much credit does Obama deserve for improvements in the stock market?
Some, but not all, said Lawrence White, an economist at New York University.
"There are many underlying currents in the economy and the federal government can effect their direction and flow," he said. "But the president is just one part of government. There’s Congress, regulatory agencies and the courts and they all fill this amalgam."
White was skeptical about Connolly’s assertion that the decline of the market was due to Bush and the rise because of Obama. He said policies by both presidents helped lift the recession: Bush pushed through the Troubled Asset Relief Program in October 2008 that eased credit by allowing the U.S. Treasury to buy up to $700 billion in mortgage backed securities from financial institutions; Obama proposed the stimulus, which helped save and create jobs.
"There was a set of actions started by Bush and continued by Obama that were, in my general opinion, the right actions," White said.
Michael Jones, chief investment officer with Riverfront Investment Group of Richmond, linked the upswing to actions by the Federal Reserve System and not presidential policies.
White said the two indexes Connolly’s office used -- the blue-chip Dow and the tech-heavy Nasdaq -- are not the best measures of overall stock market performance. He suggested we look at two gauges that track a broader array of companies.
So we turned to Standard & Poor’s 500 Index, which measures 500 stocks representing a wide swath of the U.S. economy. The S&P 500 opened at 849.64 on Inauguration Day. It closed at 1,351.77 on the day of Connolly’s statement. That’s a 59.1 percent increase.
We also looked at the Wilshire 5000, which measures more than 6,500 stocks of all types. The index averaged 8,603.17 during the week on Inauguration Day and closed at 14,290.97 on the day of Connolly’s statement. That’s a 66.1 percent increase.
We should note that both these indexes have doubled since early March 2009, when the stock market bottomed out.
One last note: As of March 8, the stock market had not changed much since Feb. 13, when Connolly made his statement. None of the closing figures we give for that date has varied by more than 1 percent.
Connolly said the stock market has doubled since Obama "was sworn into office."
Connolly based his statement on the Dow. But to make his math work, the congressman omitted a 28 percent drop in the Dow that occurred during the first seven weeks of Obama’s presidency, attributing that to the Bush administration. Connolly advantageously begins counting for Obama when the Dow, in early March 2009, sank to its lowest level in almost 12 years.
We wouldn’t quibble if the congressmen had said the market has doubled during Obama’s term -- every index we examined shows it has done just that since March 2009. But Connolly’s statement demands a count from Day 1 of Obama’s administration and when start there,
a different picture emerges.
The Dow rose 55.5 percent from Inauguration Day to the day of Connolly’s statement. Two broad indexes tell a similar story: the S&P 500 went up 59.1 percent and the Wilshire 5000 increased by 66.1 percent. It’s debatable how much of the improvement can be pinpointed to the president’s policies.
So Connolly’s claim has a foundation that is cracked by the weight of exaggeration and cherry-picked data. We rate it Mostly False.
Decision Virginia, Connolly launches truth squad, defends Obama budget, Feb. 13, 2012.
Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, accessed Feb. 28, 2012.
PolitiFact Virginia, Bob McDonnell says Virginia has gained 60,000 jobs since he became governor, Nov. 17, 2010.
PolitiFact, NRCC ad says 1,500 jobs lost daily since President Barack Obama took office, Feb. 28, 2012.
Trading Economics, United States GDP Growth Rate, accessed Feb. 29, 2012.
Google Finance, Dow Jones Industrial Average history, accessed Feb. 28, 2012.
Google Finance, NASDAQ Composite history, accessed Feb. 29, 2012.
CNNMoney, JPMorgan scoops up troubled Bear, March 18, 2008.
MarketWatch, Lehman files for bankruptcy protection, Sept. 15, 2008.
Interview with Tom Arnold, associate professor of finance at the University of Richmond Robbins School of Business, Feb. 29, 2012.
Interview with Michael Jones, chief investment officer at Riverfront Investment Group, Feb. 29, 2012.
Interview with Lawrence White, deputy chairperson of economics at the Leonard N. Stern School of Business, NYU, March 1, 2012.
YCharts, Wilshire 5000 Prince Index, accessed March 6, 2012.
Email interview with Kim Shepherd, spokeswoman for Wilshire, March 7, 2012.
Market Watch, S&P 500 Index, accessed March 6, 2012.
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