Stock market falls most since 2020, to lower level in real terms than when Biden took office

Stock market falls most since 2020, to lower level in real terms than when Biden took office

The stock market fell on Wednesday by the largest amount since June 2020. The stock market’s value has fallen in value under Biden, after adjusting for inflation.

It’s not just stocks that are losing value. So are bonds. High inflation is making them worth less. Interest rates on treasury and municipal bonds are usually under 3%, much lower than the current inflation rate of over 8 percent.

Since people’s retirement accounts usually contain stocks, bonds, or stock mutual funds, dropping stock and bond values have left many Americans’ 401(k)s and retirement accounts smaller in real terms than when Biden took office.

While prices are going up, people’s savings are shrinking. Their savings accounts are earning interest rates of less than 1%, which fails to keep pace with an inflation rate of over 8%. Effectively, people’s savings accounts are losing over 7% of their value each year.

CNBC reports:

The Dow Jones Industrial Average posted its biggest loss since 2020 on Wednesday after another major retailer warned of rising cost pressures, confirming investors’ worst fears over rising inflation and rekindling the brutal 2022 sell-off.

The Dow shed 1,164.52 points, or 3.57%, to 31,490.07, the average’s biggest decline since June 2020….It’s the fifth Dow decline of more than 800 points this year….The S&P 500 traded 4.04% lower to 3,923.68, also the worst drop since June 2020.

The stock market previously fell for seven straight weeks. The S&P 500 index has fallen by 17.7% in 2022.

The stock market has fallen even more after taking into account inflation, to a lower level than when Biden took office. The dollar has lost at least 8.3% of its value over the past year, and more than 10% of its value since Joe Biden took office.

When Biden took office, the most famous stock index, the Dow Jones Industrial Average, was at 31,188.38. On May 18, 2022, over a year later, it closed at 31,490.07. But that doesn’t take into account inflation. If you subtract 10% for inflation, it was only 28,341.06 on May 18. That’s 2,847 points lower — 9.1% lower.

The other main stock index, the S&P 500, was at 3851.85 when Biden took office. On May 18, 2022, it closed at 3923.68. But that doesn’t take into account inflation. If you subtract 10% for inflation, it was only 3531.31 on May 18. That’s 320 points lower than Biden took office — 8.3% lower.

Smaller stock indexes have fallen even more than the Dow Jones and the S&P 500. The Nasdaq is down 4,226.82 points, or 27%, during 2022. The Russell 2000 is down 21% during 2022.

These stock market declines reflect economic weaknesses: the U.S. economy shrank at a rate of 1.4% in the most recent quarter, reflecting a huge rise in America’s trade deficit. American exports decreased by 9.6%, while imports grew by 17.7%. U.S. productivity dropped at a 7.5% annual rate, the most since 1947.

Under Trump, the U.S. economy outperformed Europe, especially during the pandemic year of 2020, when Britain, France and Italy experienced much sharper economic declines than the U.S. The U.S. economy shrank 3.5% in 2020. The economy shrank much more in Europe: 7.9% in France, 9.9% in the United Kingdom, and 8.9% in Italy.

But that has changed under Biden. While America’s economy was shrinking recently, France’s economy was growing in 2022, and France’s inflation rate is lower than America’s. A finance professor describes the current era in the U.S. as “The Biden stagflation,” combining high inflation with economic stagnation.

Biden’s policies caused inflation, according to economists like Bill Clinton’s Treasury Secretary, Larry Summers, and Obama advisor Steven Rattner. As Rattner noted in the New York Times, Biden has spent “an unprecedented amount” of taxpayer money, which resulted in “too much money chasing too few goods.”

To deal with the high inflation of the Biden era, Senator Majority Leader Charles Schumer (D-NY) suggested a tax increase. But raising taxes on Americans would likely reduce economic growth and could deepen the coming recession. Many economists are already predicting a recession by 2023.

America’s economic productivity may decline further. The economy is being held back by Biden Administration policies that discourage work, reward idleness, and make it harder for companies to attract employees. Biden enacted policies that reduced the size of America’s private-sector workforce and made America less economically competitive.

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for and has appeared on C-SPAN’s “Washington Journal.” Contact him at


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