We pulled monthly approval averages before, during, and after stock market crashes in 1987, 1997, 1998, 2000, 2001, 2008 and 2011, and looked at how they changed. For good measure, we also looked at consumer sentiment data from the University of Michigan.
On average, consumer sentiment dropped 2.4 points between the month before a stock sell-off and the month it happened — and then an additional 1.1 points by the month following.
But presidential approval actually went up between the month of a buy-off and the month afterward. In part that's because the 2001 stock collapse was the result of the Sept. 11, 2001, attacks — which spiked George W. Bush's approval ratings. And in part it's because a number of the crashes in late 2008 occurred just as America was electing Barack Obama, which positively affected Bush's ratings.
But it's mostly because a stock market crash is only one thing in the grand spectrum of what's happening in politics, just as it is only one part of what's happening in the economy. In November 2008, consumer confidence hit bottom — so after the 445-point drop on Nov. 20, toward the end in a string of such sell-offs, confidence was already on its way back up for a bit. (We have to mention, too, that by dealing with monthly averages/values, we're necessarily adding a level of vagueness that's unavoidable.)
It is certainly the case that economic indicators can suggest how presidential elections will go. (See: Hoover, Herbert.) A stock market crash is not a long-term indicator, though, any more than a blizzard is a long-term indicator of the state of the climate. It's an event, and a jarring one — but one that happens in the context of a lot of other activity, and one that often happens in the context of subsequent market gains.
Not that Obama is celebrating Friday's/Monday's market fluctuations, especially because it opens the door for things like this:
Of course, that's the same guy who tweeted this: