As Congress debates more coronavirus stimulus, don’t exaggerate the effect of the 2008 bailouts on the stock market

CHAPEL HILL, N.C — The $2 trillion stimulus bill to fight the ills of the coronavirus that may be close to passage brings to mind the outwardly similar government bailout in the autumn of 2008.

You may think this parallel is good news for the stock market, since the 2008 stimulus appeared to work. After all, the bear market came to an end, didn’t it? And equities then entered into an extraordinary and unprecedented bull market that didn’t end until a month ago — 11 years later.

Well, sort of.

Actually, this cheerful narrative glosses over some harsh realities. The bear market in 2008 not only continued following the passage of the 2008 stimulus programs, it became even more ferocious. It lasted more than five additional months and roughly halved the S&P 500 index

SPX, +1.15%

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