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President Biden’s State of the Union: How the Stock Market Performed in His First 2 Years

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President Joe Biden has plenty on his mind as he heads into another State of the Union address Tuesday evening. Look no further than the performance of the stock market over his first two years in office for evidence of what the nation has faced.

Emerging from the pandemic crisis, the
Dow Jones Industrial Average
gained about 11% over the year following Biden’s inauguration on Jan. 20, 2021, Investors were optimistic about the rollout of Covid-19 vaccines, strong corporate earnings and economic growth, and the Federal Reserve’s easy monetary policy. 

The coin flipped in Biden’s second year in office, with the Dow falling 4%. The highest inflation in decades prompted the Federal Reserve to raise interest rates at an aggressive pace, plunging the U.S. economy into a technical recession in the first half of 2022. The Ukraine-Russia war, which began in February, destabilized financial markets and the global economy, affecting commodities, currencies, and more.

Combined, the Dow gained just 6% in Biden’s first two years as president. How does that compare? Since the start of the 20th century, the Dow posted a positive gain 65% of the time in the first half of a president’s term, according to research by Dow Jones Market Data. The average increase was about 14%.

Though the market rose, its performance on Biden’s watch was the worst first two years of any presidential term since 2001 and 2002, when George W. Bush was at the helm. The Dow fell 19% during the span that included the Sept. 11 attacks and the collapse of the dot-com bubble.

Things were much worst when Herbert Hoover took office in March 1929. The Dow plunged more than 40% in his first two years at the Great Depression began. Franklin D. Roosevelt took the reins from Hoover in 1933 and oversaw the nation’s recovery, with the index gaining more than 90% in his first two years in office, the best performance on record, according to Dow Jones Market Data.

Of course, a two-year period doesn’t tell the entire story. The Dow climbed 20%, for example, in the last two years of Bush’s first term, according to Dow Jones Market Data. And the vast range of factors outside of a president’s control is the main driver of what happens in financial markets.

Entering Biden’s third year in office, the U.S. still faces major economic and geopolitical risks. Inflation is subsiding, but it is higher than the Fed’s goal of 2%. The Fed’s preferred gauge of rising prices rose 4.4% year over year in December. Plus, a strong labor market is raising fears of a vicious cycle in which rising wages push prices higher, leading workers to demand more pay.

Abroad, things look just as concerning. The war in Ukraine continues and already-high tensions with China remain fraught. Last week, Secretary of State Antony Blinken postponed a trip to China after a suspected Chinese spy balloon was discovered in the U.S.

To cap it all off: A standoff between Republicans and Democrats over the debt ceiling threatens to push the U.S into default.

Nonetheless, investors started the year relatively more bullish. In December, Barron’s asked eight investment strategists how the
S&P 500
would perform in 2023. The average of their answers was a return of more than 10% on the year, a marked improvement from last year’s double-digit decline.

The economy is expected to expand slightly in 2023 too, with the Fed projecting gross domestic product will rise 0.5%. In 2022, U.S. GDP grew at a 2.1% annual rate, based on the first reading of fourth quarter GDP.

The Dow is off to a strong start in Biden’s third year. The blue-chip index has rallied 1.5% from Jan. 20, 2023, to Monday’s close.

President (Party) Inauguration Date 1 Year in Office 2 Years in Office
William McKinley (R) 3/4/1897 11.66% 61.42%
William McKinley (R) 3/4/1901 -4.16% -2.62%
Theodore Roosevelt (R) 9/14/1901 -1.41% -25.41%
Theodore Roosevelt (R) 3/4/1905 23.26% 15.58%
William Taft (R) 3/4/1909 13.50% 0.01%
Woodrow Wilson (D) 3/4/1913 1.83% -30.62%
Woodrow Wilson (D) 3/5/1917 -16.35% -11.36%
Warren G. Harding (R) 3/4/1921 14.38% 39.14%
Calvin Coolidge (R) 8/3/1923 16.66% 52.55%
Calvin Coolidge (R) 3/4/1925 22.31% 29.55%
Herbert Hoover (R) 3/4/1929 -12.86% -42.34%
Franklin D. Roosevelt (D) 3/4/1933 96.06% 90.53%
Franklin D. Roosevelt (D) 1/20/1937 -28.84% -19.82%
Franklin D. Roosevelt (D) 1/20/1941 -14.54% -6.72%
Franklin D. Roosevelt (D) 1/20/1945 31.10% 13.98%
Harry S. Truman (D) 1/20/1949 10.31% 36.09%
Dwight D. Eisenhower (R) 1/20/1953 0.40% 36.47%
Dwight D. Eisenhower (R) 1/21/1957 -6.15% 25.59%
John F. Kennedy (D) 1/20/1961 10.46% 6.01%
Lyndon B. Johnson (D) 1/20/1965 10.33% -5.38%
Richard Nixon (R) 1/20/1969 -16.47% -8.73%
Richard Nixon (R) 1/20/1973 -16.64% -36.91%
Jimmy Carter (D) 1/20/1977 -18.99% -12.67%
Ronald Reagan (R) 1/20/1981 -11.02% 12.64%
Ronald Reagan (R) 1/21/1985 20.06% 66.02%
George H. W. Bush (R) 1/20/1989 19.80% 18.41%
William Clinton (D) 1/20/1993 20.05% 19.36%
William Clinton (D) 1/20/1997 15.04% 36.41%
George W. Bush (R) 1/20/2001 -7.70% -18.90%
George W. Bush (R) 1/20/2005 1.87% 20.00%
Barack Obama (D) 1/20/2009 33.39% 48.73%
Barack Obama (D) 1/21/2013 20.25% 28.61%
Donald J. Trump (R) 1/20/2017 31.49% 24.61%
Joe Biden (D) 1/20/2021 11.31% 5.95%

Note: Data includes all terms of multiple-term presidents.

Source: Dow Jones Market Data.

Write to Brian Swint at


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