The response of US stock prices to fiscal shocks changed in 1980. Before 1980, higher stock prices followed an increase in government spending or revenue. After 1980, stock prices dropped after the same fiscal shock. The reason for this shift may be due to different economic mechanisms at play before and after 1980. In the earlier period, an expansion in supply drove the positive stock price response, while in the later period, positive fiscal shocks led to lower consumption, productivity, and higher inflation and interest rates.