by Alan Hall
Updated: January 10, 2019
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Those who want President Trump to stay in office should hope the stock market rises, and those who want him ousted should hope it crashes.
Why? History shows that the stock market is a useful indicator of people’s attitudes toward the president. Socionomic theory proposes that society’s overall mood regulates both stock prices and the public’s perceptions of its leaders. Positive social mood makes society feel optimistic, bid up stock prices and credit leaders for their good feelings. Negative social mood makes society feel pessimistic, sell stocks and blame leaders for their bad feelings.
These tendencies are evident in presidential re-election outcomes. Presidents Hoover and Carter, for example, lost bids for re-election during trends toward negative social mood as reflected by declining stock prices. In fact, the stock market is a better re-election indicator than inflation, unemployment and GDP growth combined, as my colleagues at the Socionomics Institute demonstrated in a 2012 paper.
Social mood’s influence is also evident in the results of U.S. presidential impeachments and near-impeachments. Twice in history the U.S. House of Representatives has voted to impeach a president. In both cases social mood was trending positively, as reflected by rising stock prices, and in both cases the Senate voted for acquittal.
Figure 1 illustrates the timing of the first presidential impeachment. On March 2, 1868, the House of Representatives formally agreed to eleven articles of impeachment against President Andrew Johnson. The Senate took three