Stock Market During the George H.W Bush Term (1989-1993)

George Herbert Walker Bush became president on January 20th, 1989. His theme of his presidency was of harmony and conciliation President H.W Bush entered his presidency during a period of a radically changing world. The Soviet Union was beginning to collapse, the Berlin Wall fell, and after a long forty years, the Cold War headed towards its end. During Bush’s term of presidency, the stock market was impacted in accordance to things under his control, as well as things out of his control. In his first year, Bush was confronted with the Exxon Valdez oil spill in Alaska. The Exxon Valdez oil spill happened on March 24th 1989 in Prince William Sound, Alaska.

This was an incident out of President H.W Bush’s control, but obviously had a negative impact on the economy. In response to the oil spill, many “fisheries for salmon, herring, crab, shrimp, rockfish and sablefish were closed, with some shrimp and salmon commercial fisheries remaining closed through 1990” (Amadeo, 2009) This oil spill created a large decline in the commercial fishing industry, causing many people to go out of business.

There were over two thousand Alaskan Native Americans and thirteen thousand other “subsistence permit holders” who lost the source of their food because of the accident (Amadeo, 2009). The tourism industry in the Alaskan area immediately lost over twenty six thousand jobs with more than $2.4 billion in sales loss (Amadeo, 2009). In January of 1991, President H.W Bush played a significant role in organizing the international community of thirty-two nations against an aggressive Iraq who violated international law by annexing Kuwait, which is also known as the first Persian Gulf War (Gulf Wars, 2005). The United States led the coalition of nations and on January 18th of 1991, began an enormous air war to destroy Iraq’s forces and military infrastructure. Iraq retaliated by launching missiles at Israel and Saudi Arabia, attempting to break up the coalition, but they were unsuccessful.

The strong Unites States-led coalition invaded Kuwait and Iraq on February 24th, 1991, and over the next four days, they demolished the Iraqi forces. President George H.W Bush declared a cease-fire on February 28th, 1991, and the coalition had defeated the Iraqis and liberated Kuwait (Gulf Wars, 2005). This First Persian Gulf War affected the U.S stock market and economy drastically. There were some expansionary effects as well as some contractionary effects. One of the expansionary effects of the Gulf War on the U.S. economy and stock market was the extra stimulus given to the consumer’s demand of U.S goods from the government spending (Throop, 1991). The monetary costs of the war to the United States were mainly covered by assistance from our allies.

Some of these financial contributions were “in-kind”, which were contributions of goods or services. These “in-kind” contributions obviously did not alter the demand for U.S. goods, but the remaining cash contributions and monetary spending by the U.S. military did have an effect on the American consumer’s demand (Throop, 1991). “According to Data Resources, the extra Defense Department purchases of goods and services attributable to the Desert Shield and Desert Storm operations rose from 0.2 percent of real GNP in 1990.Q4 to 0.5 percent in 1991.Q2. In real dollars this amounts to $7.5 billion in 1990.Q4 and $22.4 billion in 1991.Q2”(Throop, 1991).