Do Elections Affect the Economy and Job Market?

There’s an Election? Who knew?

The answer is WE ALL DO! 

Election season can be challenging for most of us. The constant barrage of commercials, fundraisers and “competing lawn signage” can be exhausting. The best part of the election for many is when it’s completed. 

Elections can have an effect on the labor market, consumer confidence, as well as business leaders whose confidence is often shaken. However, when we look historically at how elections have impacted the unemployment, stock market and dollar value we see that the election itself has little effect. Here are some charts that better explain these stats. With less than 60 days to the national election, my hope for all of you is to seek truth, compassion, ideas, and confidence that your vote will be used wisely and support the initiatives that matter to you, your business and your community.

The market charts were created from data prior to President Biden stepping down from the ticket. “Each presidency also faced different and unique economic challenges. Trump went through a period of historic low interest rates and a once-in-a-lifetime pandemic; on the other hand, the Biden administration encountered a high interest rate environment, global inflation, and two wars.”-Moheb Hanna- market analyst. Current trading on the DOW as of 9/17/24 is over 41,000.

The unemployment rate (with the exception of the global pandemic) has continued to go down and has teetered around 4%.

The US dollar is a unique currency that may appreciate or depreciate for different reasons; it is the world’s reserve currency and a haven that investors flock to at times of uncertainty. It is also highly impacted by US economic performance and interest rates. The US dollar significantly declined as Trump assumed the presidency in 2016. The DXY fell from 102.00 to 89.00, then recovered to 93.00 as Trump’s presidency ended. It is worth remembering that COVID significantly impacted the weakness of the USD during Trump’s last year as president.

The DXY’s initial reaction as Biden took office was a decline; however, it wasn’t as much as the decline witnessed when Trump did. The index declined from 93.00 to 90.00, and shortly after, it began its recovery back up to 112.00 in September 2022. The US dollar’s appreciation during Biden’s presidency was mainly due to the Federal Reserve interest rate hikes and the war in Ukraine. The dollar index declined from its peak at 112.00 and has been trading from 102.00 to 106.00 since October 2022.

While each of these show adjustments, the key takeaway from my perspective is that the election itself does not have a long term impact on economic factors.  The leaders and the choices made during their administration set the future course.

Something to think about.

https://www.oanda.com/us-en/trade-tap-blog/markets-events/us-election-economic-metrics-to-follow/