I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today's stock market message is an unmistakable vote of confidence for the president.
was written back on June 20, 2007 when George W. Bush was the President. Then again - Paul Krugman has had fun with it on a couple of occasions.
Of course, most well informed people would argue that the stock market is not the same thing as the labor market. I guess Mr. Kudlow could distance himself from his quote back then by acknowledging the error in his old thinking.
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Kudlow is also saying that the Democrats are far better economic stewards than the Republicans.
From the abstract of a 2003 paper in one of finances top journals, if not the top journal, the Journal of Finance:
The excess return in the stock market is higher under Democratic than Republican presidencies: 9 percent for the value-weighted and 16 percent for the equal-weighted portfolio. The difference comes from higher real stock returns and lower real interest rates, is statistically significant, and is robust in subsamples. The difference in returns is not explained by business-cycle variables related to expected returns, and is not concentrated around election dates. There is no difference in the riskiness of the stock market across presidencies that could justify a risk premium.
– "The Presidential Puzzle: Political Cycles and the Stock Market", by UCLA financial economists Pedro Santa-Clara and Rossen Valkanov, at: http://personal.anderson.ucla.edu/pedro.santa-clara/Politics.pdf
For more on the far better economic performance of the Democrats, see: http://richardhserlin.blogspot.com/2008/08/its-not-just-economy-in-general-thats.html
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