{"id":40149,"date":"2024-10-15T14:36:58","date_gmt":"2024-10-15T18:36:58","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?p=40149"},"modified":"2024-10-16T17:13:52","modified_gmt":"2024-10-16T21:13:52","slug":"business-report-do-elections-influence-stock-markets-economy","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2024\/10\/business-report-do-elections-influence-stock-markets-economy\/","title":{"rendered":"Business Report: Do Elections Influence Stock Markets\/Economy?"},"content":{"rendered":"<figure id=\"attachment_39192\" aria-describedby=\"caption-attachment-39192\" style=\"width: 212px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-39192 size-medium\" src=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2023\/11\/burnell-vc-212x300.png\" alt=\"\" width=\"212\" height=\"300\" srcset=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2023\/11\/burnell-vc-212x300.png 212w, https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2023\/11\/burnell-vc.png 432w\" sizes=\"auto, (max-width: 212px) 100vw, 212px\" \/><figcaption id=\"caption-attachment-39192\" class=\"wp-caption-text\">Matthew Burnell, Financial Advisor, HK Wealth Management Group, Clifton Park.<\/figcaption><\/figure>\n<p>By Matthew Burnell<\/p>\n<p>As we approach the 2024 presidential elections many people are wondering will this election have a major impact on the economy and markets? You may have heard the expression: Don\u2019t let how you feel about politics overrule how you think about investing. According to the Pew Research Center, they ran a study asking subjects to rate economic conditions as good or excellent over time. It was no surprise that Republicans rated economic conditions more favorably when a Republican was President and Democrats rated the economic conditions more favorably when there was a Democrat as president.<\/p>\n<p>Looking at just the last four presidents and the S&amp;P 500 performance, during President Obama\u2019s eight-year term the S&amp;P returned 16.3% and President Trump\u2019s term the S&amp;P returned 16%. President Biden\u2019s term through August of this year the S&amp;P 500 had returned 12.5% and going back to 2001, President Bush\u2019s term saw S&amp;P 500 returns at -4.5% over that period. President Bush began his term during the dot com bubble and ended during the subprime mortgage crisis. Coming out of this crisis President\u2019s Obama and Trump were in charge during a historically postive market run, while as President Biden stepped into office during the Covid pandemic. So, there were certainly some large economic factors that greatly affect the Stock market regardless of which party was in power.<\/p>\n<p>Regardless of who the winning party is, crucial to a president\u2019s success in implementing their agenda is the configuration of Congress, comprised of the Senate and House of Representatives. In the long run, it is policy, which matters more for the economy and markets. It is often the case that rhetoric about policy differs from actual policy implemented once elected.<\/p>\n<p>Monetary policy, fiscal policy, economic growth, labor markets, and corporate profits are likely better areas to focus on when thinking of market performance. Focusing on two areas, Fiscal and Monetary policy are likely key agenda items for both parties.<\/p>\n<p><span class=\"Apple-converted-space\"><span class=\"\"><b><span class=\"s1\"><span class=\"s2\"><!--more--><\/span><\/span><\/b><\/span><\/span>Fiscal Policy, which is determined by congress and the president, encompasses the power to tax and the power to spend. Neither branch of government can make a fiscal policy decision without the involvement of the other. The president may propose a certain fiscal policy action, such as raising tax rates for the wealthy; however, unless Congress passes legislation to raise tax rates for these individuals, no change will occur. Even if Congress does pass legislation, the result will likely be somewhat different than the president\u2019s proposal as negotiations including concessions for both parties are likely.<\/p>\n<p>Broadly speaking, the large fiscal deficit will likely grow as generally Republicans favor tax cuts and Democrats favor tax credits and spending. Changes in the rate of government taxation affect the amount of corporate earnings, the amount of consumer disposable income, and the incentives for individual workers to produce. One major fiscal policy issues the parties will need to address is the 2017 Tax Cuts and Jobs with many provisions set to expire in 2025. A few of the major provisions set to expire include the increased standard deduction and elimination of personal exemptions, increase of the child tax credit, widened tax brackets at lower tax rates for the majority of taxpayers, elimination of the qualified business income deduction for owners of pass through entities which are often small business owners, elimination of the bonus depreciation and the elimination of the $10,000 State and Local Tax Deduction for Federal tax purposes.<\/p>\n<p>Monetary Policy is set by The Federal Reserve which is party neutral and influences the overall money supply which affects general economic behavior. The Fed\u2019s tools in monetary policy include changing reserves required by banks, changing the discount rates that the banks pay for short term loans from the Fed and conducts open market operations in which the Fed either sells government securities which in turn decreases the money supply with the intention of contracting economic activity or buys back government securities and thus adds money to the economy with the intention of expanding economic activity.<\/p>\n<p>Big news recently was the Fed cutting the interest rates. What this means is the Fed cuts the discount rate (the rate at which banks can borrow from any of the Federal Reserve Banks) with the target of influencing lowering the rates banks lend to each other for short term borrowing. When banks can borrow funds at lower rates and lend more money, they increase the supply of money in circulation, and this stimulates demand. We saw the opposite of this when the Fed started increasing rates back in 2022 with the intent to cool the economy and curb inflation by making it more expensive to borrow money for both businesses and consumers. The difficulty is that results of rate changes are not known right away (lag), so the Fed\u2019s timing and rate adjustments success is not known until sometime in the future.<\/p>\n<p>While the above are certainly not all inclusive and the economy and markets are much more complex than what can be written in a few pages, hopefully this helps to think about how policies affect the economy as a whole and markets.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Matthew Burnell As we approach the 2024 presidential elections many people are wondering will this election have a major impact on the economy and markets? You may have heard the expression: Don\u2019t let how you feel about politics overrule how you think about investing. According to the Pew Research Center, they ran a study [&hellip;]<\/p>\n","protected":false},"author":89,"featured_media":39192,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-40149","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-reports"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Business Report: Do Elections Influence Stock Markets\/Economy? - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2024\/10\/business-report-do-elections-influence-stock-markets-economy\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Do Elections Influence Stock Markets\/Economy? - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"By Matthew Burnell As we approach the 2024 presidential elections many people are wondering will this election have a major impact on the economy and markets? 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