The 2024 presidential election is approaching and will be held on Tuesday, November 5th. The president will have power to pass some executive action on his/her own; however, the majority of policy change takes place in congress. The election of Congressional members will also be held alongside the presidential election. Needless to say, this November carries a heavy significance for our country’s future, and its anticipation is resulting in rising tensions.
Historically, economic trends have had a larger impact on the market, as presidential elections have little effect on long-term returns. US Wealth Management analyzes and summarizes historic market data after presidential elections, and their data concludes that there is not a strong relationship between the S&P 500 return rate and the distribution between the political parties in office. This contradicts the idea that a divided office will result in delayed action on potential recessions.
In this particular election, Morgan Stanley expresses that investors may be worried about potential policy change concerning taxes, tariffs, and immigration. For instance, proponents of immigration may argue that the 3 million migrants in recent years has increased the labor force, thus growing the economy. Opponents on the other hand might worry that changes at the border could contribute to a saturated labor market and an overwhelmed housing supply.
Overall, the 2024 presidential election may result in some short run volatility, but it is likely to have little to no impact in the long run. Therefore, investors should not panic but rather stay calm and wait to see the results in the medium to long run. Monitoring trends in the economy and inflation will be the most effective way to remain a clear-minded investor.
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