“Presidential Elections and Economic Policy” are central to understanding market trends and economic impacts. Rather than focusing on which candidate wins, this discussion highlights how proposed policies may shape economic outcomes and influence investment strategies.
This is Brad Barrie, Chief Investment Officer & Portfolio Manager with Dynamic Wealth Group. Welcome to this market and economic update. In this video, we’ll discuss the upcoming presidential election and the candidates’ economic platforms.
Source: AI generated by DALL-E.
This election is historic because the economic policy proposals of both candidates are still being unveiled, despite the election being only two and a half months away. Still, it’s possible to not only draw similarities and differences between the two candidates, but it’s important to review what history tells us about the impact of each political party on the economy and markets.
It’s also no secret that politics have become much more polarized in recent years, and many Americans feel very strongly about the candidates. However, while elections are important as voters, taxpayers and citizens, it’s important to vote at the ballot box and not with the actions we take on our portfolios.
Over the next few minutes, we’ll explore these topics and show why investors should not overreact to any election outcome or policy proposal. As history has shown us that what is said during an election is not necessarily what happens afterwards.
First, this chart shows that the economy has grown steadily since World War II across both Democrats (shown in blue) and Republicans (in red). Recessions are illustrated by the shaded blue lines.
While this may not seem intuitive to some investors, there are many more significant factors that have an impact on business cycles beyond which party is in the White House. These factors, such as globalization and the information technology revolution, took place over decades and would have occurred regardless of who was in the White House.
Over time, it’s these broad business cycle trends that drive investment returns. So, while economic policies can impact factors such as taxes and industry regulations, investors should keep in mind that they are not the only drivers of market performance.
Next, despite easing inflation and a strong economy by many metrics, consumer confidence remains low. Consumers have been through a lot over the past few years, and there has been a significant rise in consumer debt.
As you can see from this chart, total non-mortgage consumer debt has more than doubled over the past two decades. Student and auto loan balances in particular have surged recently, increasing to their highest rates since 2003.
Both presidential candidates have centered their economic platforms on consumer issues for this reason. Despite their differences in many areas, especially when it comes to social policy, their economic proposals share many broad similarities. Both candidates have focused on the cost of living, including grocery prices, prescription medication costs, and housing expenses. These will likely continue to be the key talking points through the rest of the election cycle.
Finally, this chart shows the highest marginal individual and corporate federal tax rates over the past century, with select major changes to tax rates labeled. It shows that taxes are actually fairly low relative to historic levels.
However, this chart can be somewhat misleading, given the complex nature of income taxes. Tax rates are just one component of total taxes paid, allowable deductions for example have changed dramatically over time. That said, some expect taxes to rise in the future, given the growing size of the budget deficit.
As expected, there are notable distinctions in crucial areas such as taxation and policy approaches between the candidates. President Trump advocates for extending previous tax cuts and potentially decreasing corporate tax rates, while Vice President Harris emphasizes tax credits for middle- and lower-income citizens. However, they both agree on raising the child tax credit and no taxes on tips.
The reality is that despite the perceived differences between the two parties, many policies often stay in place during transitions of power, and the changes that do occur tend to be incremental. In many ways, this is a feature of our political system since it takes broad support to enact new policies, even when the president’s party also controls Congress. For instance, the Reagan-era tax cuts have remained largely intact for decades.
So, while some investors may be nervous about the election’s impact on markets and the economy, historical evidence suggests that presidents often receive disproportionate credit and blame for long-term economic outcomes. As former first lady Barbara Bush said, “Your success as a family… our success as a nation… depends not on what happens inside the White House, but on what happens inside your house.” Thus, as the election heats up, investors should express their preferences at the ballot box and not through their actions with their portfolios.
We hope you found these high-level insights helpful. If you are a financial advisor and would like more information on our Multi-Dimensional Approach towards asset management, feel free to download our eye-opening whitepaper titled, “Busting seven risk and return myths”, click the link below or visit our website DynamicWG.com, or emailing us at: Info@DynamicWG.com. If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor if so desired. Until next time, take care everyone, and make smart, logical & fact-based financial decisions.
Clearnomics and Dynamic Wealth Group, LLC are not affiliated entities. No part of this should be taken as investment advice. Consult your financial advisor for specific investment recommendations tailored to your specific situation.
Dynamic Wealth Group (“Dynamic”) is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Dynamic by the SEC, nor does it indicate that Dynamic has attained a particular level of skill or ability. This material prepared by Dynamic is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Opinions expressed by Dynamic are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Dynamic, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.
Dynamic does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.
Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. Past performance is no guarantee of future results. Actual returns may be lower.
< Commentary
Presidential Elections and Economic Policy
“Presidential Elections and Economic Policy” are central to understanding market trends and economic impacts. Rather than focusing on which candidate wins, this discussion highlights how proposed policies may shape economic outcomes and influence investment strategies.
This is Brad Barrie, Chief Investment Officer & Portfolio Manager with Dynamic Wealth Group. Welcome to this market and economic update. In this video, we’ll discuss the upcoming presidential election and the candidates’ economic platforms.
This election is historic because the economic policy proposals of both candidates are still being unveiled, despite the election being only two and a half months away. Still, it’s possible to not only draw similarities and differences between the two candidates, but it’s important to review what history tells us about the impact of each political party on the economy and markets.
It’s also no secret that politics have become much more polarized in recent years, and many Americans feel very strongly about the candidates. However, while elections are important as voters, taxpayers and citizens, it’s important to vote at the ballot box and not with the actions we take on our portfolios.
Over the next few minutes, we’ll explore these topics and show why investors should not overreact to any election outcome or policy proposal. As history has shown us that what is said during an election is not necessarily what happens afterwards.
First, this chart shows that the economy has grown steadily since World War II across both Democrats (shown in blue) and Republicans (in red). Recessions are illustrated by the shaded blue lines.
While this may not seem intuitive to some investors, there are many more significant factors that have an impact on business cycles beyond which party is in the White House. These factors, such as globalization and the information technology revolution, took place over decades and would have occurred regardless of who was in the White House.
Over time, it’s these broad business cycle trends that drive investment returns. So, while economic policies can impact factors such as taxes and industry regulations, investors should keep in mind that they are not the only drivers of market performance.
Next, despite easing inflation and a strong economy by many metrics, consumer confidence remains low. Consumers have been through a lot over the past few years, and there has been a significant rise in consumer debt.
As you can see from this chart, total non-mortgage consumer debt has more than doubled over the past two decades. Student and auto loan balances in particular have surged recently, increasing to their highest rates since 2003.
Both presidential candidates have centered their economic platforms on consumer issues for this reason. Despite their differences in many areas, especially when it comes to social policy, their economic proposals share many broad similarities. Both candidates have focused on the cost of living, including grocery prices, prescription medication costs, and housing expenses. These will likely continue to be the key talking points through the rest of the election cycle.
Finally, this chart shows the highest marginal individual and corporate federal tax rates over the past century, with select major changes to tax rates labeled. It shows that taxes are actually fairly low relative to historic levels.
However, this chart can be somewhat misleading, given the complex nature of income taxes. Tax rates are just one component of total taxes paid, allowable deductions for example have changed dramatically over time. That said, some expect taxes to rise in the future, given the growing size of the budget deficit.
As expected, there are notable distinctions in crucial areas such as taxation and policy approaches between the candidates. President Trump advocates for extending previous tax cuts and potentially decreasing corporate tax rates, while Vice President Harris emphasizes tax credits for middle- and lower-income citizens. However, they both agree on raising the child tax credit and no taxes on tips.
The reality is that despite the perceived differences between the two parties, many policies often stay in place during transitions of power, and the changes that do occur tend to be incremental. In many ways, this is a feature of our political system since it takes broad support to enact new policies, even when the president’s party also controls Congress. For instance, the Reagan-era tax cuts have remained largely intact for decades.
So, while some investors may be nervous about the election’s impact on markets and the economy, historical evidence suggests that presidents often receive disproportionate credit and blame for long-term economic outcomes. As former first lady Barbara Bush said, “Your success as a family… our success as a nation… depends not on what happens inside the White House, but on what happens inside your house.” Thus, as the election heats up, investors should express their preferences at the ballot box and not through their actions with their portfolios.
We hope you found these high-level insights helpful. If you are a financial advisor and would like more information on our Multi-Dimensional Approach towards asset management, feel free to download our eye-opening whitepaper titled, “Busting seven risk and return myths”, click the link below or visit our website DynamicWG.com, or emailing us at: Info@DynamicWG.com. If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor if so desired. Until next time, take care everyone, and make smart, logical & fact-based financial decisions.
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