Is Obama the Biggest Drag on Investor Confidence?

Suppose that Barack Obama was not the president of the United States. The stock market might be higher and the global capital markets not as nervous as they are now. Or, perhaps it does not matter who the current president is. Perhaps no one could overcome the difficulties that the economy and federal balance sheet face. That is as likely the case.

A new Bloomberg poll shows “Global investors’ confidence in President Barack Obama has plummeted over the past four months, with almost three-quarters of them now viewing his policies as a drag on the U.S. business climate.” The quarterly poll, conducted Sept. 26, covered 1,031 investors, traders and analysts who are Bloomberg subscribers. That sample may be imperfect and the results no better than a whim.

Obama may be no more than a proxy. Voters may not see it that way next year, but that does not help capital markets investors now. They cannot place blame on something abstract. The economy must have a face.

It is impossible to say, because it is impossible to know, whether another president would have made a difference to the economy. When Obama took office, the banking crisis had just ended. The recession, which may people believe still has not ended, was beginning its terrible run. The federal government put $878 billion into the economy, but it barely caused a pause in the recession. Experts like Nobel Prize winner Paul Krugman say the stimulus was not even half of what was needed. But Congress was reluctant to create any more deficit spending. And in a period of austerity, the president may not get a single dollar more for either stimulus or his jobs program.

The president did not have to deal only with problems inside the U.S. market. Several outside influences may have helped cripple GDP. Some monetary policy experts claim that China’s manipulation of the yuan has badly hurt U.S. trade profits. The slowdown of the economies of Europe have undermined American exports to that region. The EU may be troubled, but it still has the largest GDP in the world — at least 20% larger than that of the U.S.

Apologists for the president will say that no one could have done any better in his position. The Bloomberg poll shows that the capital markets blame him directly. A victim of his time? Maybe, but the only victim convenient for investors to blame.

Douglas A. McIntyre