Obscure Economic Indicator: Presidential Approval Ratings When they go down, stocks go up.
By Daniel Gross [WaPo SLATE on-line] Posted Wednesday, April 5, 2006, at 5:03 PM ET If President Bush were a stock, his chart would look less like that of Texas-based oil giant Exxon-Mobil and more like that of Wal-Mart—a spike in 2001 followed by a slow and seemingly inexorable slide down. (Here's an aggregation of all his poll numbers.) Bush's poor job-approval numbers and exhaustion of political capital may be bad news for Republican constituents hoping for investor-friendly legislation like extending the temporary tax cut on dividends. But according to one long-standing indicator, Bush's woes might be profitable for investors. Ned Davis Research, Inc., a well-respected research firm based in Venice, Fla., has charted presidential approval ratings as measured by the Gallup Poll against the weekly performance of the Dow Jones Industrial Average since August 1959. ... And the data show some strange correlations. Stocks did better when presidents were doing poorly, and they did worse when presidents were more popular. In the weeks when the presidential approval rating was below 50 percent, stocks rose at an annualized rate of 9.2 percent. In weeks when the approval rating was between 50 and 65 percent, the Dow rose at an annualized rate of 5.4 percent. And in those periods when approval ratings were above 65 percent (about one-fifth of the time), the Dow rose at a 2.6 percent annual rate. http://www.slate.com/id/2139376/fr/nl/ -- Jim Devine / "There can be no real individual freedom in the presence of economic insecurity." -- Chester Bowles
