How the US Presidency Influences Global Markets—But Not as Much as You Think

Every four years, the world tunes in to watch the U.S. presidential election, with analysts and commentators speculating on how the result will ripple across global markets. While the presidency undeniably carries influence, particularly in certain sectors, it’s important to recognize that the global economy is a far larger and more complex beast. Presidents may leave their mark, but the broader economic forces often render their impact relatively limited—with notable exceptions.

Recessions: Bad Timing, Not Bad Leadership

Presidents are often judged by the state of the economy during their term. If there’s a recession, critics are quick to blame the person in the Oval Office. However, recessions are typically the result of long-term economic cycles and systemic issues that no president can fully control. For instance:

• George W. Bush faced the 2008 financial crisis, which was rooted in years of risky lending practices and complex financial instruments. Blaming his administration entirely overlooks the global nature of the crisis and its roots in systemic failures.
• Herbert Hoover is synonymous with the Great Depression, yet the economic collapse of the late 1920s had more to do with global trade imbalances and unsustainable debt levels than any single policy.

Sometimes, a president simply inherits the storm. For example, Barack Obama entered office during the tail end of the Great Recession, and while his policies may have influenced recovery, the economic groundwork for the downturn was laid well before his term.

Presidential Impact: Sector-Specific, Sometimes Global

Presidents can have significant influence on certain sectors or industries, and in rare cases, their actions can even ripple into the global economic landscape. Consider the following examples:

• Donald Trump imposed tariffs on Chinese goods, disrupting trade flows and impacting industries like manufacturing and agriculture. While this created sector-specific effects, global GDP growth during his term was largely driven by broader factors like technological innovation and central bank policies.
• Joe Biden has emphasized clean energy policies, boosting investments in renewable energy while pressuring fossil fuel industries. However, the global energy market remains far more influenced by OPEC decisions and worldwide demand trends.

Presidential decisions often create winners and losers within specific industries, but the global economic engine continues to be powered by trends such as demographic shifts, technological advancements, and the policies of other major economies.

When Presidents Shake the Global Economy

There are rare moments when a U.S. president’s actions fundamentally alter the global economic landscape:

• Franklin D. Roosevelt’s New Deal: In the wake of the Great Depression, Roosevelt’s sweeping reforms not only reshaped the U.S. economy but also influenced economic policy thinking worldwide. The introduction of large-scale government intervention became a blueprint for other nations during economic crises.
• Richard Nixon’s decision to end the gold standard: This single action fundamentally changed the global financial system, transitioning the world to floating exchange rates and reshaping international trade and investment for decades.

These examples highlight how unique historical contexts and decisive actions can amplify the president’s influence on global markets, making them exceptions to the general rule.

The Bigger Beast: The Global Economy

The global economy is driven by interconnected forces that no single individual can control. Central banks, multinational corporations, technological innovation, demographic trends, and geopolitical shifts play far larger roles in shaping economic outcomes.

Take the 2008 financial crisis as an example. While U.S. policy responses were critical, the crisis was inherently global, with European banks and global trade networks deeply entangled in the fallout. Similarly, the COVID-19 pandemic—which reshaped global economies—was influenced far more by the virus’s spread and public health responses than by any specific leader.

Summary

The U.S. presidency carries significant weight, particularly in influencing domestic policy and specific sectors of the economy. However, the idea that one person can dictate the trajectory of the global economy is an oversimplification. Recessions often come down to timing, and broader economic forces—from central bank policies to global trade—play a far larger role.

That said, there are moments in history when presidential actions have indeed reshaped global markets, proving that while the presidency may not control the beast, it can sometimes nudge its direction. The next time you hear someone claim that the global economy hinges on who sits in the Oval Office, remember: presidents may set the stage, but the global economy writes the script.