Will Trump get reelected?

Author: Forex Live | Category: Education

Can Trump win again at the November election?

RY
When Donald Trump first came into office he had the most powerful asset any president would be happy to get, a strong economy, but as things have progressed in his 4 years, it is evident the economy has indeed turned sour, and this will be a very big deterrent when November comes around and it's time to vote. 

He has long touted the fact that the economy has been fairing extremely well under his administration despite how his predecessor's actions had left him with something broken that he had to fix. However, after the virus hit the United States, the cracks began to appear, making it clear to everyone just how vulnerable the economy was to any external threat.

Now, we're not blaming the current president for the virus, he is after all facing an unprecedented situation. However, we are blaming him for how he has handled the situation and it is this that is going to be considered and reflected back to him in the form of electoral votes come November.

According to a report by Oxford Economics, come November, Trump will lose to Joe Biden, in what they referred to as a 'historic defeat'. The model they use takes into account unemployment, disposable income, and inflation to predict election results.

This same model has correctly predicted the popular vote in every election since 1948 other than 1968 and 1976 (although two candidates lost the popular vote but won the presidency in that span, including George W. Bush in 2000 and Donald Trump in 2016).

According to this model, Trump is expected to capture only 35% of the votes, that is a sharp reversal from the model's pre-crisis prediction which showed the current president gaining 55% of the votes. It would seem that it would take an economic miracle to turn the tides for the president.

In the latest polls conducted by The Washington Post, it showed that Biden is leading the charge. Using a sample of 1006 adults, it showed Biden gaining 54% vs 39% for Trump. It would seem that the polls are showing a big move from Republicans to Democrats, but that hasn't stopped Trump from coming on the wire and reminding people of how wring polls can be.

Too Early to Call it Done?

Now to be perfectly clear, these models are based on all things being normal and let's face it, we aren't in Kansas anymore. So, to fully depend on these models would be unwise as they have no track record of predicting elections during pandemics.

Moreover, the elections are four months away. And the past six months show how much the world can change in that period of time. No one was predicting a 20% unemployment or a 40% collapse in GDP six months ago. Now, those are the consensus projections.

If the elections were set today, Joe Biden might win the elections hands down, but over the course of the next 5 months, Trump might be able to formulate a plan of attack. He will try to spin everything against Biden and China. This is Trump we're talking about. Nobody can go negative like Trump.

Who will Show Up to Elect?

With the pandemic still in full swing in the U.S. It is quite difficult to predict who is going to show up come election time. 

If there is a strong turnout for Democrats, this could cause Trump to lose Florida, Texas, Arizona, Tennessee, and Georgia, all of which are considered to be pure Red states. Losing these would make it extremely difficult if not impossible for Trump to win this one.

However, if there is weak Democratic turnout, along with a sharper economic recovery, this could give Trump a "razor-thin" electoral college victory, just like what happened when Trump faced Clinton. While Clinton won the popular vote, it was the Electoral Wins that secured Trump his victory.

"Every incumbent president facing a recession in the lead-up to reelection has lost," said Ed Mills, Washington policy analyst at Raymond James.

But the key will be whether voters feel that the economy is back on the right track, with unemployment falling sharply and GDP rapidly recovering.

"The real debate is what does the economy look like on Election Day?" said Mills. "Will the country have gotten past the worst of Covid-19 and the worst of the economic shock?"

No one can answer those questions with certainty right now.

What's the Stock Market Say?

This election uncertainty could pose a risk to the stock market, which has spiked since late March on hopes of a V-shaped economic recovery and in response to massive stimulus from the federal government.

Wall Street doesn't want to see the pro-business elements of the Trump agenda disappear.

Although investors don't love Trump's trade wars, his corporate tax cuts boosted S&P 500 earnings and set off a bonanza of share buybacks. Trump's regulatory rollbacks and spending hikes have also helped lift stocks.

Despite the pandemic, the S&P 500 is still standing nearly 40% above where it was prior to Trump's election.

If Biden wins the White House -- and the Senate flips to Democrats -- investors will be worried about tax hikes on companies and the rich, new restrictions on oil and gas production and increased financial regulation, this will mean that the long bullish run that the markets have experienced might be finally coming to a close.

Until next time,
Trade Safe


This article was submitted by Royal.
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