NCPA - National Center for Policy Analysis

Did GOP Congresses Prompt Dow 10,000?

April 21, 1999

Some political economists are linking the Dow Jones Industrial Average's climb to 10,000 and beyond to the election of the first GOP Congress in 40 years -- an event which occurred on Nov. 8, 1994.

Here is the basis of their argument:

  • On the date of that election, the Dow stood at 3,850.
  • Between election days in 1992 and 1994 -- during President Clinton's first two years in office with a Democratic Congress -- the Dow rose only 600 points and averaged an 8.5 percent annual rate of return.
  • But during the Republican years in Congress, the Dow gained 6,150 points in five years -- and averaged a 24 percent annual rate of return.
  • Interest rates on 30-year Treasury bills rose during Clinton's first two years from 7.7 percent to 8.1 percent -- but have since declined to 5.7 percent.

Those who credit the GOP with these achievements contend they rest on Republican initiatives on Capitol Hill. Specifically, they cite the cut in capital-gains tax rates, the first balanced budget in 30 years, the expansion of Roth IRAs and the historic welfare reform bill of 1996.

Source: Stephen Moore (Cato Institute) and Richard Weiss (Strong Capital Management), "Whose Bull Market Anyway?" Washington Times, April 18, 1999.


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