Source: Barron’s

The second year of a presidential term [2006] is often charcterized by weak economic conditions, including recession. [Barron’s]

“In the second year of a term, Washington launches stimulus efforts to make sure the economy and the stock market are in good shape by the time the next election rolls around. This has been true even for second-term presidents like George Bush. After all, they want their party to remain in power.”

Weaker economic conditions next year could help ease the rate of appreciation in the housing market because of the restraint of job creation that usually comes with a recession, but could keep mortgage rates low.

One Response to “Sophomore Year Of A Presidential Term Is Usually Weak”

  1. John Philip Mason says:

    I can’t help but wonder if the stock market will also do better when the real estate market cools off? It’s easy to understand why people are investing greater sums of money in a real market with double digit returns, while the DJI and other indexes have been pretty flat for the past few years. Especially when you consider that most securities can only be purchased with up to a 50% margin (if at all), but some real estate deals are being financed at up to 100%.