MARCUS BROOKES' VIEW

Making America vote again

  • Marcus Brookes
  • 27 July 2020
  • 10 mins reading time

I discussed a number of geopolitical issues in a webinar with my colleague David Ryder earlier this week. The outlook for the US featured heavily, so I thought I’d put fingers to the keyboard to summarise one of the central issues raised.

The next US general election is set for November this year when President Trump will be vying to become the first president since William McKinley in 1900 to win re-election while the country battles a recession.

His prospects don’t look “great”.

On Tuesday 21 July, Nathan Gonzales, an elections analyst at CQ Roll Call, noted that the election polls predicted a net gain of three- to five-senate seats for the Democrats. This probably would give them control of the upper house in the US political system. They already hold the House of Representative and that looks fairly solid.

There’s a long way to go and the voters’ decisions tend to be crystallised in the final six weeks of campaigning i.e. from late September onwards, but President Trump clearly has some convincing to do.

As chart 1 shows, the economic stimulus that President Trump provided early in his term has long since run out of steam, while unemployment has risen faster than at any time since the 1930s depression.

However, the economic downturn that the US is experiencing is severe but I wouldn’t refer to it as a depression. Rather, I’d think of it as an economic suppression: economic activity has been deliberately reduced because of the lockdown. This makes a relatively swift recovery far more likely once a treatment is developed and the lockdown lifted.

Before that, though, the country needs to deal with the pandemic. Chart 2 suggests that this is not going to plan, and that appears to be having a good deal to do with President Trump’s waning popularity.

In the meantime, the US economy is suffering and that is very bad news for a president who mentioned something about making America great again.

But what of his opponent?

Senator Joe Biden, the de facto Democrat nominee, has been noticeable by his absence. As early as 5 April, the Los Angeles Times published a column entitled, “Joe Biden is stuck in his basement. It just might help him win.”

But Senator Biden will need to do more than just not be Donald Trump. At 77 years of age, he is President Trump’s senior by four years. Indeed, as Vox.com helpfully points out, Senator Biden is “older than the microwave”[1].

Americans could elect the oldest-ever president in November. Unsurprisingly, there have been indications from Senator Biden’s camp that he might only run for one term. After which, his vice president would be likely to take over the candidacy for president. And that could bring another first, as the three front runners to become Senator Biden’s running mate are all non-white females.

Regardless of who wins, I foresee a vitriolic election campaign. After that, I have some concerns over the extreme nature currently prevailing in US politics.

President Trump’s tenure has been characterised by controversial policies and rhetoric that have divided people and increased the public debt burden.

Whatever distribution of power Americans elect in November, I’m hopeful that there will be a moderating factor in the balance of power across the Senate and the House of Representatives. That could curtail the temptation of either party to further stretch US public finances in order to provide legislative and financial support focused primarily on their respective voters.

As an investor, this is important to me because I want to see a robust US economy flourish. That requires sensible domestic and international policies, as well as controlling the huge public debt burden in the US. What’s good for the US economy is good for investors the world over.

I’d be delighted to see whoever is elected in November be part of a proven move to develop America’s “greatness”.

[1] “How old should a president be?”, Vox.com, 20 May 2020.

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