There was some chatter in recent weeks that once the sequestration deadline came and went, policymakers would be spurred to action by rattled investors and a sinking Wall Street.
Despite everything, the stock market is back at a record high.The Dow Jones industrial average, which measures the performance of 30 blue-chip companies, rose more than 120 points in morning trading on Tuesday, surpassing its previous record close of 14,164.53, which it achieved nearly five and a half years ago, as well as its record intraday high, set around the same time, of 14,198.10.
Note, there are still several hours left in the trading day, and whether the Dow will close at an all-time high remains to be seen.
But at least for now, Wall Street is apparently unconcerned with the gradual pain associated with the sequester and impressed with increased Chinese stimulus, stronger-than-expected European retail sales, recent developments at the Fed, and corporate profit reports.
To put the trend in context, I added some arrows to this chart, one showing where the Dow Jones closed when President Obama was first inaugurated, and the other showing where the index stood this morning. Note that the Dow has more than doubled in value since bottoming out in March 2009.
And, of course, there's a political angle to this to keep mind.
To reiterate a point from a few months ago, the New York Times recently found that over the last half-century, the president who's overseen the strongest performance on Wall Street was Bill Clinton, and the second best, by a wide margin, is Barack Obama.
And as we discussed in October, the real fun begins when we reminisce about what Obama's Republican critics were saying in early 2009. Indeed, the Wall Street Journal ran an entire editorial in early March 2009 arguing that the weak Dow Jones was a direct result of investors evaluating "Mr. Obama's agenda and his approach to governance."
Karl Rove and Lou Dobbs made the same case. So did Rush Limbaugh, Sean Hannity, and Fred Barnes. For a short while, it was one of Mitt Romney's favorite talking points, too. Even John Boehner got in on the larger attack.
I don't think a strong stock market is necessarily proof of a robust economy, but the right shouldn't try to have it both ways. If a bear market in 2009 is, in the minds of conservatives, clear proof that Obama's agenda is misguided and dangerous, then soaring Wall Street indexes shouldn't be dismissed by those same detractors as politically irrelevant.