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Strategist James Carville famously helped to keep Bill Clinton’s 1992 winning election campaign on track with ‘the economy, stupid’ hung on the walls of the team’s headquarters as one of three key messages. Since then, it’s been oft-repeated by pundits and candidates alike – yet just because it’s become a cliché doesn’t mean it’s not true or useful.
Those of us in business might well understand the need to have the economy at the forefront of our thinking – but the hotly contested 2020 election seems only to have proven how important it still is as a way of understanding voter behavior. An Edison Research exit poll showed how the economy was the named the most important issue when voters decided who to pick for President. That fact might normally feel unremarkable – but this is no normal year. The poll’s findings mean electors saw it as more important than either the coronavirus or racial inequality, two issues that have dominated headlines this year.
If the economy is more important than a pandemic that has killed more than 230,000 Americans to date, it’s tricky to imagine any way it could not be the biggest motivator in the future too.
So, what does this all mean for America in 2021?
Well, initial reports of the exit poll suggested it would be a good night for President Trump, with the topic being safer ground for him electorally than either the pandemic or racial inequality. As IG demonstrated, he liked to badge himself as a ‘job president’ – with a series of policies aimed at manufacturers and Wall Street as well as the pocketbooks of everyday Americans.
While it’s far too early for deep election analysis yet, that may well be why the race looked to have been closer than some pollsters predicted. Yet, in the long run, it might also show why contender Joe Biden was right to have a cautious approach, described by IG as ‘catch all’. He needed to speak to businesses and workers who were voting on the basis of normal election concerns – just as much as those driven by the new and unprecedented challenges of the virus, race and the climate.
It’s true to say that the days since the vote have been dogged by uncertainty – and this might even drag on for weeks if the result of the ballot is dragged through the courts. But it’s also true to say that this uncertainty hasn’t been as bad for the economy as businesses would fear.
In fact, shares performed strongly in the fallout of the result, partly because of the closer-than-expected nature of the race. It might be the case that a divided government, with Congress, the Senate and Presidency split across different camps, might well prevent dramatic change. Instead of a big lurch towards protectionism or globalism, this result could actually mean a calmer period.
Facebook shares, for example, jumped more than more than 8%, while health insurance firms also saw strong growth and the Dow, S&P 500 and Nasdaq all climbed.
Chris Low, chief economist at FHN Financial, explained: “The thinking in the markets … is it looks like it’s divided government regardless of who takes the White House.
“That means a lot less probability of big sweeping legislative change, big sweeping spending or tax programmes and therefore a lot less uncertainty.”
The dust will take a long while to settle on the 2020 US election but some things are clear. The economy is still as important as ever when it comes to understanding what has happened and what will happen next for America.