US Presidents, The Economy & Investing

October 21, 2015

Paul Brandus, author of the just-released “Under This Roof: The White House and the Presidency,” is an award-winning, independent member of the White House press corps who founded West Wing Reports in 2009. He is also the most-followed White House correspondent on Twitter, @WestWingReport. Brandus distributes television, radio and print content for clients around the U.S. and abroad. He is also a Washington columnist on economics and finance for MarketWatch.

With the presidential primary season kicking into high gear, thought it would be a good idea to catch up with him to discuss what real impact presidents, and candidates, can have on the economy and investors. Does the president have an impact on investors? Or is it a combination of Congress, the Fed, etc., and the president is just a player in that?

Paul Brandus: Well, it's all of the above, all of the players that you mentioned—the Fed, Congress, the president, even people who are just running for president.

For example, Hillary Clinton a couple of weeks ago talked about pharmaceutical prices in a way that was detrimental to these health care stocks, and they took a tumble in the minutes after she commented. It's almost an implicit recognition of the strength of her campaign, despite all the problems that she has had. When Hillary Clinton says something like that, she's a market mover.

If somebody like Chris Christie or Rand Paul said something about the pharmaceutical prices or pharmaceutical stocks, I have a feeling they would not be quite the market mover that she was. Donald Trump is in a position to be a market mover in similar ways as well.

Now, the broader question is just how much influence a president has over, say, the stock market. There's no question a president can come out and talk about oil prices or anything. And there's no question that he or she can move the markets. But all presidents try to be very careful about that.

In these daily press briefings, you can ask the president's press secretary a question that's related to, say, interest rates. And they will shy off; they'll say, "Well, we're just not going to comment on anything that potentially impacts the market." They don't want to be seen as taking sides.

Members of Congress, on the other hand, are not nearly as disciplined with their messaging, and they say things all the time that can move markets. But a member of Congress, of course, is not as prominent and doesn't have anywhere near the soapbox that the president has. Let's talk a little bit about history, since that's your expertise. What recent president has had the most impact on changing the economy?

Brandus: Franklin Roosevelt really changed the economy in fundamental ways that no other president has matched. Roosevelt came in and inherited the horrible Depression that started six months after Herbert Hoover was inaugurated. Some blame Hoover, but other people say, “Look, he inherited Calvin Coolidge’s economy.” And you can debate that, of course, forever.

Roosevelt came in in '33 and the phrase, "the first 100 days" is still used today to show just how quickly a president gets out of the gate in terms of tackling his agenda. And FDR's first 100 days, even now, are held up as the standard that every other president has tried and failed to match.

His first 100 days were amazing. It was an economic emergency. The unemployment rate was 25 percent. Millions of Americans had lost their homes. Poverty was widespread. It was really just very drastic conditions. Roosevelt got to work right away.

In those first 100 days, he started a slew of government programs that really turned the economy around. He was a Keynesian guy, big spending. He didn't mind borrowing money just to pump it into the economy.

He created all kinds of public service jobs, programs, anything to get people back to work, anything to keep liquidity in the economy. He shored up the banking system overnight. A lot of what he did we have with us today; for example, Social Security. The Roosevelt legacy still lives on today in many respects.


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