The Elections Good News

An extensive exit poll this week demonstrated the vast divide in American politics. On each issue the respondents came down heavily along party lines. One question that stood out to me was, “How do you feel about the state of the economy?” Over 85% of Republican respondents said it was “Great” while over 85% of Democrats selected “Terrible” as their answer.
I can understand ideological differences over healthcare, immigration and other social issues but as a numbers guy I have a difficult time with varying opinions about the economy. Unemployment is near record low levels, GDP is high, growth is strong and earnings continue to outperform expectations.  In just about every measurable field the numbers say that the economy has rarely, if ever, been better. So how can almost half of America consider it to be “Terrible?”
I suppose there are isolated situations but it’s hard to imagine any significant demographic that has not benefitted economically from the current growth cycle. Which leaves me to assume that unfortunately, politics has just become part of the human reality and we tend to see things through the blue or red lenses we wear.
Investors, however, don’t have the luxury of having their investment decisions clouded by colored glasses, at least if they want to survive and thrive. They must look at the numbers as they are, and attempt to predict where they are likely to go. Since I’ve already stated that the numbers continue to be positive, let me address how I feel the recent election might affect those numbers going forward. Let’s take off our colored glasses for a moment.
The 2018 tax cut greatly benefitted businesses and consumers and should continue to do so. Deregulation has been a strong positive factor for continued growth. A business-friendly attitude at the executive branch has spurred growth and development in many industries. Historically low inflation and interest rates have helped the economy and innovation continues to improve productivity. The big question is, will any of the above conditions change as a result of this election? The day-after market rally was Wall Street’s answer to that question. They were not cheering the democratic takeover of the house, nor the Republican gains in the Senate, but rather the financial peace that comes from assuming a divided congress will get very little done. From an investor point of view, a congress that can’t act, can’t hurt anyone.
I suspect that the next two years should see a continued pattern of growth as the mechanisms are already in place to allow that to happen. However, the areas of growth will shift slightly as the new political landscape makes some slight adjustments, so investors need to stay informed. Both sides won in this election and both sides lost. No one ever gets everything they want but I believe, as a financial advisor and a numbers guy, that investors just got two more years of economic growth, although perhaps just a little bit less than the past two.