Advertisement
  1. Business

PolitiFact: A look at stock market surge in past six years

FILE - In this Dec 3, 2014 file photo, former Virginia Sen. Jim Webb speaks at the Capitol in Richmond, Va. Most U.S. presidential candidates really don't want to spend nearly two years bowing and scraping to voters and campaign donors. And most voters sure don't want to hear about the presidential race for anywhere near that long. Yet 20 months out from the November 2016 presidential election, no fewer than two dozen potential candidates are maneuvering to run and elbowing one another for advantage. Candidates are hiring political staff, donors are taking sides, party operatives are researching potential opponents and activist groups are holding straw polls of dubious value.  (AP Photo/Steve Helber, File) WX206
FILE - In this Dec 3, 2014 file photo, former Virginia Sen. Jim Webb speaks at the Capitol in Richmond, Va. Most U.S. presidential candidates really don't want to spend nearly two years bowing and scraping to voters and campaign donors. And most voters sure don't want to hear about the presidential race for anywhere near that long. Yet 20 months out from the November 2016 presidential election, no fewer than two dozen potential candidates are maneuvering to run and elbowing one another for advantage. Candidates are hiring political staff, donors are taking sides, party operatives are researching potential opponents and activist groups are holding straw polls of dubious value. (AP Photo/Steve Helber, File) WX206
Published Mar. 20, 2015

The statement

"The stock market has almost tripled since April of 2009."

Former Sen. Jim Webb, D-Va., March 15 on ABC's This Week

The ruling

Many Americans believe that the economic recovery has only recently picked up steam. But one group that is widely seen as benefiting in recent years are investors in the stock market. This is a point that former Sen. James Webb, D-Va. — a potential 2016 candidate for president — made during an interview on ABC's This Week.

Host George Stephanopoulos brought up a comment by Webb that "powerful financial interests spending billions to elect people who think the current drift toward a permanent aristocracy is okay."

Webb explained his thinking this way:

"If you see what has been happening to our country over the past 20 or 25 years or so, with the economic model — first, the model itself has broken apart. … The employment model that was based on full-time employment, manufacturing-based, taking care of your working people, (it) fell apart a lot, when the manufacturing sector itself was hurt so bad in the past 20 years.

"But the other thing is … if you have capital, if you have assets, you're doing pretty well. The stock market has almost tripled since April of 2009. If you don't — and this is particularly true right now with the generation that is coming into full adulthood — they don't have that model anymore. They are doing part-time jobs, consultancy jobs, they've got student loans to pay off."

We wondered whether Webb was right that "the stock market has almost tripled since April of 2009."

Several different indexes are commonly used to measure the overall value of the market. We looked at four: the Dow Jones Industrial Average, which is a smaller group of blue-chip stocks; the Standard & Poor's 500, which offers a larger and broader mix of stocks; the NASDAQ Composite, which includes a lot of fast-growing technology stocks; and the Wilshire 5000, which includes the broadest list of publicly traded companies.

The following table summarizes the growth of these three measurements between April 1, 2009, and now.

MeasureApril 1, 2009March 16, 2015
Dow Jones Industrial Average7,76217,977
Standard & Poors 5008112,081
NASDAQ Composite1,5524,930
Wilshire 50008,24221,949
MeasureApril 1, 2009March 16, 2015
Dow Jones Industrial Average7,76217,977
Standard & Poors 5008112,081
NASDAQ Composite1,5524,930
Wilshire 50008,24221,949

These numbers show that Webb is definitely right for the NASDAQ Composite (in fact, he underestimates a bit) and that he's just about on target for the S&P 500 and the Wilshire 5000 if you round the figures upward. Webb's claim that the stock market "almost tripled" overshoots the increase for the Dow, which is 2.3 times higher now than in April 2009.

Still, Lawrence J. White, an economist at New York University's Stern School of Business, said comparisons like Webb's are sensitive to the choice of start and end dates, among other issues. "For example, if one takes the Dow Jones Industrial Average and instead makes the comparison with its previous high in 2007, the increase is only 25 percent — not the more-than-doubling that occurred from its low point in 2009," he said. "And if one nets out inflation from that 25 percent increase, the 'real' increase in the stock market has been only about half of that increase."

The statement is accurate but needs additional information, so we rate it Mostly True.

Louis Jacobson, Times staff writer

Edited for print. Read the full version at PolitiFact.com.