Trump Is No. 2 Earnings Grower Among Post-WWII Presidents

Donald Trump is No. 2 is terms of corporate earnings growth for post-World War II presidents, up 13.4% annually on average. The president with the best ranking was Barack Obama, at 26%.

This compilation, from CFRA Research’s chief investment strategist, Sam Stovall, is telling because how economies and businesses fare has a lot to do with reelection chances. Obama handily won a second term in 2012.

To be sure, the effects of the coronavirus this year could hold down company profits and spoil Trump’s record. Goldman Sachs, for instance, believes that the virus’ economic impact worldwide will slash earnings growth to zero for the rest of the year.

Comparing Trump to others who complete one or two full terms is, certainly, problematical. He has entered his fourth year in office, and potentially must traverse another four years post-2020, which runs the risk of encountering economic trouble.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Obama had eight years that were unmarred by recessions (including a close call in 2016, a slowdown owing to tumbling oil prices). That extra time worked to Obama’s favor: The first half of his initial term was up and down in earnings as the nation pulled out of the worst economic slump since the Great Depression. Over his two terms, advances were easier for him as they started from a very low base after the Great Recession.

By CFRA’s tally, Bill Clinton came in third in the earnings growth sweepstakes with 12.8%, and Harry Truman was fourth at 12.6%. Clinton also was blessed with a recession-free tenure. Truman had two mild recessions as the nation demobilized from the war, but the the rest of the time he benefited from a surge in business investment as industry focused on re-converting to civilian-oriented output.

The only post-war presidents to encounter negative earnings were the father and son Bushes. George H.W. Bush (earnings down 5.3%) suffered a recession in 1990, resulting from the savings and loan debacle and the slide in junk bonds, which contributed heavily to his reelection loss that year.

His son, George W. Bush (down 14.1%), had two recessions—one at the outset of his presidency, stemming from the dot-com bust, the other at the end with the financial crisis.

In terms of gross domestic product expansion, Trump thus far is further down the scale than in the earnings ranking. He is eighth of the 13 postwar presidents, with an annual growth rate of 2.5%. That beats Obama’s 1.8%. GDP increases don’t always correlate closely with earnings. The leaders here were John F. Kennedy (5.5%), Truman (5.2%), and Johnson (5.0%).

If Trump manages to avoid a recession, then he would join the short list of presidents, all of them Democrats, who accomplished this feat: Clinton, Johnson, Kennedy, and Obama.