The S&P 500 Ups and Downs Over Three Presidential Terms
The S&P 500 Index holds an important role as one widely regarded measure of overall stock market performance. It is one of the leading indicators of the business cycle and is followed closely in the business and financial press as a measure of the overall direction of the stock market. Millions of Americans have retirement accounts that contain significant stock market investments, with returns on those investments positively correlated with movements in the S&P 500 Index. Indeed, some of the largest mutual funds in the world –stock market index funds – are managed to literally mimic movements in the S&P 500 Index or some other related index of the stock market. A rising index is frequently interpreted as a signal of favorable economic conditions, while periods of market volatility or decline can be interpreted as reflecting external challenges or uncertainties.
Presidents have no direct control of stock market movements, but presidential actions and presidential response to external events can certainly influence market movements. Here, we explore how the S&P 500 has evolved across two past and one current presidential administrations—President Trump’s first term, President Biden’s presidency, and the early months of President Trump’s second term. We begin with a brief discussion of S&P 500 Index, then describe certain large movements in the index during the indicated presidential administrations.
Overview of the S&P 500 Index
The S&P 500 Index[1] is a weighted average of the prices of the 500 largest publicly traded companies in the U.S. It is a market-capitalization weighted index, with the weights applied to each company’s stock price being the market capitalization of that company divided by the market capitalization of all 500 companies.[2] Companies with a larger market capitalization, such as Nvidia, Apple, Microsoft, and Amazon, have a greater influence on its movements than do smaller companies.
Nominal vs. Inflation-Adjusted S&P 500 Index, 2017–2025
Figure 1 graphs the S&P 500 Index, shown in red, for the period from January 2017 until July 2025. The value of the S&P 500 Index in January 2017 is rebased to equal 100, so that the vertical axis shows the value of the S&P 500 Index in each month compared to the value in January 2017. The Index in July 2025 was 278.18, representing a 178.2% increase over the value in January 2017. Put differently, every $100 invested in the S&P Index in January 2017 would be worth $278.2 in July 2025.[3]
Figure 1 also graphs the inflation-adjusted value of the S&P 500 Index to July 2025. The CPI is used as the measure of inflation, and the inflation-adjusted values of the S&P 500 Index are calculated as the value of the S&P Index each month divided by the CPI for each month. The inflation-adjusted values as graphed are also rebased to 100 in January 2017, so that movements over the period in the inflation-adjusted S&P 500 Index show the change in purchasing power to an investment in the S&P 500 over time. Inflation has reduced the purchasing power of an investment in the S&P 500, just as it has reduced the purchasing power of workers’ wages. Beginning in January 2017, the inflation-adjusted S&P 500 Index rose to a value of 210.4 by July 2025, an increase of 110.4%. This indicates that someone purchasing $100 of the S&P 500 Index in January 2017 would realize a purchasing power of that investment, in June 2025, of $210.4.
Inflation is fairly steady compared to the volatile stock market, but over time inflation has a big impact on purchasing power. The growing divergence between the nominal and inflation-adjusted values of the S&P 500 Index highlights the role of inflation in eroding the purchasing power of market gains. The gap widened considerably during the post-pandemic inflation during 2021–2022, as inflation increased to a peak annual rate of 9% in mid-2022.
Figure 1: Inflation Adjusted and Non Inflation Adjusted S&P 500
Source: Federal Reserve Bank of St. Louis’s ‘FRED’ database and authors’ calculations.
S&P 500 Under Three Administrations
Figure 2 provides a side-by-side comparison of the graph of the inflation-adjusted S&P 500 Index during the past three administrations. These are President Trump’s first term (January 2017 – January 2021, in red), President Biden’s term (January 2021 – January 2025, in blue), and the early months of President Trump’s second term (January 2025 – June 2025, in gold). Each series is indexed to 100 at the beginning of each presidential term for comparability.[4]
President Trump’s First Term:
The inflation-adjusted S&P 500, indexed so that January 2017 = 100, shows an overall upward trajectory over the course of President Trump’s first term (red line), reaching 151.18 by the end of his term of office in January 2021. This represents a 51% inflation-adjusted gain in the S&P 500 index value. His first term was also marked by modest growth in the price level, as the CPI rose 7.8% over his first four years. The inflation-adjusted stock market index did not rise steadily, however, and one big downturn occurred during the COVID-19 pandemic, as the index tumbled from March 2020 (the 38th month of his first term) before starting the road to recovery in April 2020. The fact that inflation remained subdued during this term meant that nominal market value largely translated into real market value for investors.
Biden Administration:
In President Biden’s term (blue line), the inflation-adjusted S&P 500, benchmarked to January 2021 = 100, increased to 133.86 in January 2025, a 33.9% gain. This is a substantial gain, about 7.5% per year in real inflation-adjusted gains, but is rather lower than the gain realized during President Trump’s first term. This may be due in part to the surge in inflation that occurred during President Biden’s time in office. During his term, the CPI increased by 21.5%, making it the most inflation-intensive presidential term in many years. This inflation has been variously credited to pandemic-related supply chain disruptions and to expansive fiscal and monetary stimulus. Although the nominal S&P 500 increased sharply (as seen in Figure 1), much of that gain in value had its purchasing power eroded due to inflation.
Figure 2: S&P 500 Under 3 Administrations
Source: Federal Reserve Bank of St. Louis’s FRED database and authors’ calculations.
Trump Administration (Second Term):
President Trump’s second term began just a few months ago, in January 2025. The early months show a period of volatility, with the real value of the S&P 500 index declining by 8.2% from January through April 2025, before rising in May, through July. The decline in the S&P 500 Index has been ascribed to the level, volatility, and uncertainty of tariffs imposed by the Trump Administration during this time. The overall change in the inflation-adjusted value from January to July has been a positive 3.9%,[5] much lower than during either President Trump’s first term or President Biden’s Administration.
Conclusion:
While the S&P 500 index has shown impressive nominal growth—rising by 178.2% from January 2017 to July 2025—the real, inflation-adjusted increase was a more modest 110.4%, highlighting the impact of inflation in eroding purchasing power over time. President Trump’s first term had a large increase in inflation-adjusted value of the index, a 51.2% gain amid low inflation (7.8% over his time in office). President Biden’s term saw more muted inflation-adjusted gains of 33.9% amid a period of high inflation (21.5% over his time in office). In almost seven short months, President Trump has seen inflation-adjusted gains in this stock index of 3.9%, with inflation of 0.95% over his seven months in office. We will see what the future holds.
ENDNOTES
[1] We use the daily S&P 500 Index as retrieved from FRED, and select the end-of-month value for each month as our monthly value.
[2] The weight for each company is that company’s market value (stock price times number of shares outstanding) divided by the total market value of all 500 companies.
[3] This is just the capital gain realized in July 2025 of an investment in the S&P 500 Index in January 2017. The stocks in the S&P 500 Index also pay dividends, an additional source of return from investing in these stocks.
[4] For each president, January of their inauguration year is set as month 0, and each month after that is counted until January of the successive inauguration year. For the first Trump term, January 2017 is month 0, and January 2021 is month 48. For Biden, January 2021 is month 0 and January 2025 is month 48. For the second Trump term, January 2025 is month 0, and June 2025 is month 5.
[5] As of August 12, 2025, the nominal S&P 500 index increased by 6.7% since January 2025. The inflation-adjusted value is pending, as the Consumer Price Index (CPI) for August is scheduled for release on September 11, 2025.