The US 2020 election is scheduled for Tuesday, November 3. How will the economy react to a presidential switch or another win by Trump?
August 5, 2020 | Trade360 – Let’s begin with a simple statement: The United States is the most powerful single economy in the world.
There is no competition.
Sure, some may say China is nipping at their heels, but they’re still nipping – not leading; and therefore, they are not THE most powerful, but a close second.
Some may even say that the EU has the ability to rival the U.S. when it comes to economic might; but again, that implies that they will be competing – not leading; and let’s not forget that the EU is comprised of 27 member states, with each contributing to the overall financial might of the block (and the currency that supports it).
So, when the U.S. has a presidential election coming up, the whole world stands at attention, nervous, awaiting the results, as the whole world has a vested interest in the results.
And the US 2020 elections may not be that different and yet – very different.
We’re about 5 months away from election day, but it is looking extremely likely that the U.S. and the rest of the world will still be dealing with Covid-19 or, at the very least – its impact.
When added to the extremely divisive state of politics in the U.S. and the civil unrest that exploded in late May and into June, the result is likely to be a very combustible election cycle.
So before the election draws near we wanted to take a very simple look at the possible economic outcome of President Trump winning a second term and the flipside of the coin – Joe Biden ousting him.
Business Under Trump
No matter what you think of Trump on a personal level, he was elected on a platform that was, for the most part, economic, scandals, and remarks aside. He has mostly delivered on his guarantees.
Under Donald Trump, the Dow Jones index has reached previously unheard of heights, going from 17,888 points on the eve of his election to 29,398 points in early 2020, before the CoronaVirus put a wrench in his plans.
Some may say that the rising markets were the results of Obama-age policies and acts that simply took some time to seep through, that Trump was simply reaping the rewards of those actions, and that very well may be true.
But steps he took and policies he enacted allowed that growth to continue. Under his creed of simplifying matters for companies and large corporations he lowered certain taxes, removed others, nearly started an outright trade war with China, canceled various trade deals he perceived to be as unfavorable to the U.S. and installed or started installing other deals in their stead.
It should be noted that this has nothing to do with Trump’s public image, statements, and overall behavior, which may, at best, be described as inflammatory.
From the point of view of CEO’s and companies, he’s done very little wrong; the markets were headed upwards, so were profits and despite various crises, and the economy as a whole grew by leaps and bounds.
What Biden Will Bring To The Table
While Trump rode (and is still riding) the “good for business” moniker at all costs, Biden’s biggest selling point, at least so far, has been the “I worked with Obama” line.
Some may say that hardly provides him with any distinction from the former president, but he does bring to the table something Trump could not: years of experience within the Washington system.
Biden may not have the same business credentials as Trump did, but he does have far better DC connections, which, in theory, could ease great parts of the stress put upon the legislative system by Trump’s unwillingness to work in concert with Democrats.
And if present sentiment prevails, Biden will also likely be “sent” to the White House on waves of public support from quite a broad spectrum of the population, which may aid the campaigns of other Democrats as they seek election to the Senate and House of Representatives.
Large businesses may choose to campaign against Biden or at least lean towards Trump, particularly if Biden’s running mate ends up being one of the left-leaning democrats, for fear that a “leftist”/”anti-capitalist” agenda will strip away the benefits they had enjoyed under Trump’s regime.
But it is looking extremely likely that the masses will vote with Biden.
Polls released in the early days of June have Biden up by as little as 7 points and as many as 10 points, and breakdowns of some key states have Trump losing most of those as well, though by a smaller margin than the national average.
What 2020 elections mean for the US economy
More than 5 months out, it is virtually impossible to know which way the election wind will blow. But speculation is rife as to how the U.S. economy will face a presidential switch or another win by Trump.
Still, we do want to throw our 2 cents, as it were, into the equation. How the economy reacts is really all about the type of economy you tend to favor.
If you’re pro-big businesses creating gains for themselves, thus increasing the number of jobs available in the market, which in turn creates income for more people, you will likely support a 2nd term by Trump.
If you are about creating opportunities for SMB’s and individuals via various means, giving them greater spending power thus stimulating the economy “from the bottom up”, Biden will be the outcome you should favor.
But no matter what happens
In past elections markets and currencies reacted according to predicted outcomes: the dollar rose and fell, the Dow continued to function as it did and the great American machine kept on lurching forward.
But this election cycle may not be the same as any that came before it and so the immediate aftermath may be murky.
Not only will Covid-19 have an impact on the number of mail-in ballots, which take longer to count, but the continued impact of the virus will likely still hinder any efforts at recovery the elected president may want to take, regardless of if they happen to be for big businesses or for “the little guy”.