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Subject:  Re: Second term democrat president Date:  3/24/2013  1:56 PM
Author:  JeffMLittle Number:  242438 of 270828

I apologize if I sounded snarky. I had assumed that Knighted was referring to economic growth, rather than stock market performance. The impact on stock market performance of party in congress is not explored in depth; we have a few indications but I don't feel confident that they will play out to something useful at this point.

The overall data seems to say the next 4 years will be relatively better for the economy but is silent on the issue of whether this would help or hurt in the stock market. Further confusing the issue, it is hard to say whether Clinton and Obama should be grouped with Truman or with Eisenhower as moderates. After all, we are still living in a Reaganomics tax structure.

Overall, the experiment seems to have been disappointing and I am not really sure how to fix it. According to the literature on economic growth, the congress effect is in the same direction, but smaller, than the president effect. I suspect that if you take out the periods where one party controlled all three the pattern for the rest gets really noisy. It might be simpler to key off of the primitives, like tariff levels, education funding, tax structure, money supply, etc.
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