Did Obama Restore Confidence?
By Bryan Caplan
One non-Obama-loving economist I know nevertheless gave him credit for “restoring confidence.” I agree that confidence is coming back. But does Obama deserve the credit? The obvious alternative is that panic, like grief, normally fades away a few months after bad news hits. As a wise women in Jet Li’s Fearless once said, “Cry when you are sad. When the tears are gone, life will move on.”
There’s plenty of sophisticated econometrics you could use to test whether Obama restored confidence. But is this story even superficially plausible? Well, on October 4, a month before Obama was elected, the Dow stood at 10,325. On election day, the Dow closed at 9,625 – rebounding from a low of 8,144 a week earlier, when Obama’s victory was already nearly sure.
Then what happened? Two weeks after Obama’s election, the market hit a new low of 7,507, then rebounded to close at 7,949 on inauguration day. It doesn’t look like Obama’s impending arrival did much for confidence.
Perhaps we need to actually experience Obama’s hypnotic leadership to have our confidence restored? It sure doesn’t look like it. After six weeks of legendary oratory, the Dow had crashed all the way down to 6,516. Since then, we’ve had a big rebound, but we’re still lower than we were on election day.
Bottom line: If Obama restored confidence, it looks like he did so only after shattering it first. Some accomplishment.