Graphic: After the election is settled, big issues await
The last seven U.S. presidential transitions went fairly smoothly, resulting in muted returns of the U.S. dollar and U.S. equity and fixed-income securities. The uncertainty in the 2000 election, one of the closest Electoral College margins in U.S. history, was the one standout. Whoever wins the Nov. 3 election will face many significant challenges, which are now being magnified by the COVID-19 pandemic, the high national debt and income inequality.
Transition management: Barack Obama had the most difficult economic handoff among recent presidents, with the equity market plunging amid the global financial crisis. The uncertainty surrounding the 2000 race between Al Gore and George W. Bush created rocky equity returns in the transition period, but most presidents had positive muted U.S. equity returns post-election to inauguration.
Debt debate: Although fiscal stimulus is necessary over time, federal debt continues to increase. The next president and Congress might choose to kick the can down the road, but eventually the markets will make the Federal government address the issue (unless it is monetized by the Federal Reserve).
Shoring up share: All incomes have risen over the long term. The bottom quintile has seen incomes rise around 3.7% annually since 1974, while top-quintile incomes have risen around 4.8% annually. This has contributed to the share of income for the highest earners rising, while the lowest-income quintile has been falling consistently.
*Election to inauguration. Sources: Bloomberg LP, U.S. Census Bureau
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