US Election 2024: The Final Countdown
Every four years the US presidential election is more outrageous than the prior US presidential election — 2016, 2020, and now 2024. This year’s election cycle has been shocking.
Republicans’ Standard Bearer
Former president and current Republican presidential nominee, Donald Trump, has survived not one but two assassination attempts. He’s also endured countless civil and criminal courtroom battles. Trump became the first former US president to be convicted of felony crimes when a New York jury found him guilty of 34 charges in May. That followed two costly losses in civil cases that determined Trump defamed writer E. Jean Carroll and committed financial fraud in his business. Trump’s legal team plans to appeal all three court decisions.
But a string of recent Trump courtroom victories has derailed the three remaining criminal cases against him until after November’s election. As voters head to the polls, it’s unclear whether the former president will ever face pending charges of fraud, election subversion, and obstruction. Trump’s fervent supporters denounce the civil and criminal charges against him as the greatest political witch hunt in history, with the sole intent of silencing a political opponent.
Regardless of how voters feel about the made-for-TV courtroom drama surrounding Trump, his unique blend of populist politics combined with more traditional Republican principles — lower taxes, light touch regulation, and tough foreign policy — enabled him to easily secure the Republican party’s presidential nomination. And, they make him an undeniable force to be reckoned with on Election Day.
Democrats’ Old Switcheroo
Not to be outdone in the drama department, Democrats took their own extraordinary and controversial path to selecting their presidential nominee, Vice President Kamala Harris.
After a dismal June debate performance and weeks of mounting pressure, incumbent President Joe Biden ended his re-election campaign in July, less than four months before Election Day. Democrats quickly united behind Harris as their presidential nominee.
Even though Joe Biden received more than 14 million votes in Democratic Party presidential primaries and caucuses, and Harris didn’t earn a single vote in those contests, she became the Democratic presidential nominee after delegates virtually cast their ballots for her in early August. Harris made history in the process by becoming the first Black woman and first Asian American to lead a major-party ticket.
The Harris campaign instantly breathed new life and energy into the Democrats’ previously sleepy bid to retain control of the White House. A solid debate performance against Trump on September 10 further bolstered Democrats’ confidence that they’d made the right choice in selecting Harris as their presidential nominee.
Harris has done a good job framing the vote as a choice between herself and Trump, not a referendum on the past four years of the Biden administration. Harris’ brand of populist politics and core Democratic beliefs will make her tough to beat on Election Day.
Who Will Win the White House?
Regardless of the strange paths taken to select the presidential nominees, Election Day is fast approaching. The sun has set on this summer’s Republican and Democratic national conventions. It’s unlikely that there will be another debate between the two presidential candidates. Early voting has started in a number of states. In fact, 46 states and the District of Columbia offer early voting options to all voters.
Harris has maintained a small lead over Trump in the national polling averages since she joined the race at the end of July. But most polls remain within the margin of error, making the presidential election too close to call. The 2016 election was decided by 77,000 voters in Pennsylvania, Michigan, and Wisconsin (0.06% of voters). The 2020 election was decided by 65,000 votes in Wisconsin, Arizona, Georgia, and Nebraska’s 2nd congressional district (0.04% of voters).1 Understandably, there’s fierce competition for every vote in the swing states.
With the race too close to call, Strategas Research Partners might have identified the secret sauce to predicting the election winner. The sell-side research firm has analyzed four financial and economic indicators that have an outstanding track record of forecasting past election winners. Harris is currently winning in all four of the indicators.
According to Strategas, performance of the S&P 500® in the 3-month period ahead of the election has predicted 20 of the past 24 election outcomes. If the S&P 500 is higher in the 3-month period ahead of the election, the incumbent party has typically won and vice versa.
They also assert that performance of the US dollar in the three months leading into the election has accurately forecasted eight of the past nine elections. If the dollar is weaker in the three months leading into the election, the incumbent party has won.
Market volatility as measured by the VIX is another important election indicator. If volatility peaks in the summer, the incumbent party has won. If it peaks in October, the opposition party has won. Strategas asserts that the VIX indicator is eight for eight in predicting election results.
Finally, Strategas found that the Misery Index (inflation + unemployment rate) has successfully predicted 15 of the past 16 presidential elections and every election since 1980. If the three-month average is higher year over year, the incumbent party has lost; and if it is lower, the incumbent party has won. Democrats have a modest amount of wiggle room here headed into the final weeks of the election.
While all four Strategas indicators now point to a Harris victory, falling stocks, a stronger dollar, increased volatility, rising inflation, and greater unemployment between now and Election Day could open the door for a Trump win.
Faulty Forecasts and Undecided Voters
Formerly foolproof political polls and economic indicators have failed us miserably in the past eight years. So, why should anyone put faith in them now? Already this year there have been surprise election results in Japan, France, Mexico, and India. Could the US be next? And although past predictors of economic recession have been flashing red, the resilient economy has continued to expand.
An October Surprise also could upend the expected election results. Democrats are still stinging from then FBI director James Comey’s letter to Congress that resurrected the issue of Hillary Clinton’s emails 10 days before the 2016 election.
Importantly, current polls suggest that about 18% of voters have not made up their minds between Harris and Trump.2 In what is expected to be an extremely close presidential election, possibly decided by just tens of thousands of votes, these voters could push either Harris or Trump to an unpredictable victory on Election Day.
Populists With Different Playbooks
Historically, presidential candidates drift toward the political center after securing their party’s nomination. Even the most ardent progressive and conservative policies used to gain a party’s nomination tend to soften on the campaign trail.
That’s how both Democrats and Republicans have attracted coveted moderate voters from outside their respective bases. Mitt Romney’s failed 2012 Republican presidential bid may be the best recent example.
Inexplicably, both Harris and Trump have largely neglected moderate voters. Instead they’ve chosen to further fire up their bases with rhetoric, their choices for Vice President, and bold campaign promises, as candidates have done since 2016. Fewer voters from swing states determining the election outcome, the shrinking number of undecided voters up for grabs, and past election failures are likely fueling this trend.
Harris and Trump both embrace populist policies that are popular with their supporters, but that’s where the similarities between the two candidates end. The candidates would take the country in starkly different directions.
Harris’ Policy Priorities
The Harris campaign released a list of 19 policy priorities in early September. The proposals are a shortened version of the 2024 Democratic Platform. Possibly to address criticisms that the Democratic party favors big government, bureaucracy, and is anti-business, the Harris proposals seek to reduce regulations on housing and small businesses.
Domestic policies center around providing tax credits to the middle class and small businesses; capping costs of housing, groceries, and medications; and restoring Roe vs. Wade. On border security, Harris has pledged to revive the bipartisan agreement that would add more border agents and more equipment to detect fentanyl and would ramp up the prosecution of illegal border crossers.
Harris would also seek to address climate change through the continued investment in green energy projects. Foreign policy will likely emphasize multilateralism, human rights, and strengthening global alliances, while addressing the challenges posed by China and climate-induced security threats.
Trump’s Policy Priorities
Trump continues to emphasize nationalism, border security, and economic protectionism. Key priorities would likely include reinforcing immigration restrictions, such as building a stronger southern border wall and tightening asylum laws. Trump may also aim to further reduce regulations on businesses and cut taxes to stimulate economic growth, while negotiating trade deals to favor domestic industries. Making permanent reductions from the Tax Cuts and Jobs Act of 2017 would be a policy goal.
Trump would use low taxes, low energy costs, and low regulatory burdens as incentives to encourage foreign companies to relocate manufacturing to the US. He plans to create special zones on federal land for US manufacturers. Tariffs on US imports would figure prominently into his policy plans.
Trump’s domestic agenda could feature a strong stance on law and order, with a focus on criminal justice reform that prioritizes tougher penalties. Foreign policy would likely pursue a more isolationist approach, reducing international commitments and strengthening US military power to address global threats from a position of strength.
Challenges: Divided Congress and Growing Deficit
Apart from the presidential race, Republicans are expected to win a modest majority in the Senate, while Democrats are predicted to win a small advantage in the House of Representatives. A split Congress would make it practically impossible for either Harris or Trump to move their most ambitious policy agendas forward.
Massive fiscal deficits might also thwart the new president’s policy objectives. Politicians don’t win elections by promising to balance the budget, slash popular spending programs, and raise taxes. That’s why the poor fiscal health of the US isn’t on either party’s platform this election cycle or any other cycle in recent memory.
The fiscal deficit dynamics underscore the important difference between winning an election and the reality of having to actually govern — something the new administration and the 119th Congress will find out very quickly in January 2025.
Passionate About Politics, Calm About Investing
Harris and Trump have been on an unimaginable journey, hurtling toward Election Day. Just when it seemed like politics couldn’t get any crazier, something even more bizarre happened. And on cue, October is notorious for delivering wild election surprises.
During the countdown to November 5, voters and market participants should be wary of faulty forecasts. Polling and economic indicators have failed us in recent years, and the past two presidential elections were decided by the slimmest of margins. Harris may have a modest lead in the polls now, but this race is likely going to be determined by handful of counties in a few swing states in the electoral college.
With Harris and Trump offering very different paths forward, this election could be a defining moment for America’s future. So, people should be passionate about their political party, their candidates, and the important issues that mean so much to them.
Today, more than ever, it’s important to be informed and get involved — and to vote.
It’s likely, though, that when all the votes are counted — despite all the passion on the campaign trail — that a divided government will prevent either party’s president from passing the more extreme portions of their policy agenda. And the already enormous deficit may curb the new administration’s and Congress’ ability to continue their insatiable appetite for fiscal spending.
That’s something the market will cheer. While politics may result in some volatility leading up to Election Day, volatility tends to subside after the election.3 In fact, market history shows that regardless of which political party controls the White House, the Senate, and the House of Representatives, it’s impossible to conclude that one combination has delivered better returns than any other.4 Broadly speaking, the stock market does well over most time periods.
So, get out and vote, knowing that partisan and unpredictable election seasons are followed by post-election market environments that reward objectivity and discipline in investing. Whatever the election outcome, stay calm and focus on what you can control — your long-term financial goals.
For more on the 2024 election, visit our Election Hub for investment ideas to pursue policy-related shifts and regularly updated charts.