Trump's State of the Union touted a booming stock market - but these 3 charts show why it's an awful indicator of economic progress

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Trump's State of the Union touted a booming stock market - but these 3 charts show why it's an awful indicator of economic progress
U.S. President Donald Trump delivers his State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. REUTERS/Leah Millis/POOL

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U.S. President Trump delivers State of the Union address at the U.S. Capitol in Washington

  • Trump touted a booming stock market to help make the case for his reelection during Tuesday's State of the Union address.
  • He said the markets "soared" 70% and "millions of people" with retirement accounts are now better off.
  • Here are three charts that show why that's not necessarily the case.
  • Visit Business Insider's homepage for more stories.

President Trump promoted the booming stock market at Tuesday's State of the Union address, pointing to it as a measure of his economic success.

During the address, Trump said that "stock markets have soared 70%, adding more than $12 trillion to our nation's wealth, transcending anything anyone believed was possible" and called it a record.

"All of those millions of people with 401(k)s and pensions are doing far better than they have ever done before with increases of 60, 70, 80, 90 and 100 percent, and even more."

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But these claims mask an important fact: Most Americans don't own stock - and their gains disproportionately benefit richer Americans in an era of widening inequality.

Here are three charts illustrating why stocks are an awful indicator of broad economic progress.

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The S&P 500 has grown significantly during the Trump presidency, though wages haven't made similar gains.

The S&P 500 has grown significantly during the Trump presidency, though wages haven't made similar gains.

The S&P 500, commonly used as a gauge of market growth, has climbed over 41.8% since Trump assumed office in 2017.

By contrast, the average hourly wages of workers climbed only 9% in the same stretch of time.

A 3% wage growth rate annually looks good on paper, but when accounting for inflation, worker pay has barely edged upward. Real wages have increased only 0.8% under Trump, according to the Bureau of Labor Statistics.

Even with slightly bigger paychecks, employees are also confronted with the rising price tags of housing, education and healthcare that some economists now compare to another tax on their income.

Most Americans don't actually own any stock.

Most Americans don't actually own any stock.

The chart above shows the share of Americans in each part of the wealth distribution who directly own stocks.

Data from the Federal Reserve shows that only 8% in the bottom half of household net worth own stock shares. That's compared to 89% in the upper half of the distribution.

Just over half — 51% — are in the wealthiest 10% of US households.

That trend locks out a substantial share of Americans from reaping the benefits of a booming market.

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Investment in retirement accounts is more concentrated in the upper rungs of wealth distribution.

Investment in retirement accounts is more concentrated in the upper rungs of wealth distribution.

Less than half of Americans in the bottom half of wealth distribution said they had a retirement account, which includes IRAs, 401(k)s or similar.

In a 2019 study from Fidelity Investments, the average 401(k) balance increased 1% between the first quarters of 2018 and 2019.

That followed 8% growth between the first quarters of 2017 and 2018, far below the double-digit increases Trump referred to in his address.

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