from Birch Gold Group:
Each of the presidential candidates obviously has very different economic focuses.
A recent article from Barron’s gives some insight into this, starting with the president: “If Trump is re-elected, he seems likely to continue with the policies pursued during his first term. At root, these were designed to let the private sector, the supply side of the economy, expand as rapidly as possible.”
In short, Trump’s economic focus leans toward job creation, wealth, and the betterment of private business.
Before the virus erupted, unemployment was running at historic lows, the stock market was at all-time highs (which it has recently regained despite the virus), and economic growth was proceeding at a solid if not spectacular pace.
The Barron’s piece also highlights the Democratic candidate’s economic focus: “Biden’s agenda, in contrast, is based on addressing America’s problems with economic inequality. The average household in the top 1% has 1,250 times more wealth than the average household in the bottom 50%.”
In other words, Biden is looking to redistribute economic opportunities (including some wealth) to the lower and middle classes.
As is usually the case with elected officials – and especially the case when it comes time to elect the president – each candidate’s position on the economic issues is starkly different.
Which obviously means the economic impact of either president’s policies will be different.
But despite these differences, there is perhaps an even more important question to consider: What if economic uncertainty will continue to rise in 2021 no matter which candidate is elected to office?
Either Candidate Could Have a “Tricky” Economy to Handle
An article from Al Root offers a possible economic outlook for 2021, stating simply, “Next year will be rocky.”
Keep in mind this is officially the last quarter of 2020, so there isn’t much time before a candidate is elected.
So if Root is correct, “rocky” is just around the corner. Here’s how his article explains the potential decisions that lie ahead for POTUS:
“In year four politicians do fiscal stimulus to get re-elected,” says Brian Rauscher, head of global portfolio strategy and asset allocation at Fundstrat. Years one and two are about making tough decisions about policy, deficits, and taxes.
In the graph to the right, you can see how much of an influence a president in their fourth year of a term can have on the economy.
Yet in our very unique, historic times, there is still plenty of cause for concern. For example, Root laid out the potential near-term “bubble” getting set to pop in three major market sectors:
Tech stocks are on fire, but that has left the Nasdaq trading at about 28 times estimated 2021 earnings. The S&P 500 is at 20 times. The Dow is at, roughly, 19 times.
It doesn’t seem like either presidential candidate has a good answer for that fast-approaching challenge.