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The important things

The drama with the presidential race continues with the media and some sectors of the Democratic Party questioning wether the incumbent President is fit for another 4 years, even to stay on the race, after a disastrous debate a few days ago. We still have 6 weeks for the Democratic National Convention to decide wether Joe Biden will be the candidate to oppose Trump. We have some good news in the chart below, where you have all the US presidents since 1917, alongside Congress leading party on the House and the Senate as well as other economic and social statistics. Since it’s color coded, you can see several things at first sight: (1) from the economic perspective, it really didn’t matter what party was governing, as both returns, deficits and other metrics have been similar. On the flip side, (2) excluding war times, we are at a peak in deficit spending and debt to GDP, and that has already put a toll on the dollar, that has lost value against gold. (3) it’s also interesting to see how polarized Congress is, the highest ever, which is a big negative at a time where you want bipartisan measures to help the country reduce spending and debt. More than the presidential race, which at this point resembles more a circus than a serious process, we should focus on the other two points, (deficit and polarization) if we want financial and social stability.

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Source: Jurrien Timmer, FMR co

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