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Thursday, March 4, 2021

3 Reasons For Stocks To Rise Regardless Of 2020 Presidential Election Outcome

The presidential election is just around the corner set for the 3rd of November. Election season calls for this question: will the stocks hamper because of the outcome of the presidential elections?

While the majority of investors feel like the elections will handicap stocks and trading, the savvy ones continue to depend on the study of economic trends or long-term analyses. The sole advice on this front is: do not invest your politics. The long-term economic trends are going to continue no matter who takes control of the White House in this presidential election.

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In this article, we’ve listed out 3 economic trends that will shape the future of the stock market. Let’s begin.

Manufacturing Is On The Rise

U.S. is gradually seeing the revival of manufacturing jobs. This will likely drive growth in employment, corporate margins and productivity. This is good news because manufacturing jobs tend to add 7.5 jobs as opposed to retail jobs that add only 1.2 jobs to the sector. This calculation is according to the U.S. Bureau of Labor Studies.

The total economic impact will dramatically improve than the first portion of this decade when millions of manufacturing jobs were lost to China. However, the Capex (U.S. capital expenditure) rose during President Obama’s term. Since then, the productivity curve has been on the rise and is likely to remain.

Technology Keeps Driving Growth

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The world is going through a lockdown. This has pushed big and small corporations to digitize. From old to new, all business plans are shifting to digitized operations. This trend is rapidly accelerating and is expected to continue regardless of what happens in the presidential elections. Online banking, work from home, online shopping, gaming, streaming, cybersecurity, data aggregation, cloud and so on will continue to experience extreme demand in the upcoming years despite presidential elections.

The digital economy comprises 9% of national GDP. What is even more crucial is that Capex spending on “new economy”, that is tech, software and research and development, has overshot the “old economy” comprising transportation and industrial equipment, structures and so on.

Technological stocks outdid performances of years this year. And experts suggest that this accelerating curve will go on beyond the outcome of the presidential election in November.

Global Growth

The global PMI (Purchasing Manager Indices) continues to show optimistic trends even for September. 14 out of the 18 regions mentioned in the PMI is either strengthening or expanding.

This is good news because an economic expansion generally lasts 8 years on average. So, if we’re in the beginning stages of a new phase of economic expansion then this tide could last a while. The impact of the presidential elections on this expansion phase is likely to be transient if at all.

The upcoming months are going to be turbulent but the long-term economic trends seem to be more promising than ever. 

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