How a New Presidency Will Bring About Economic Change
There’s always great uncertainty whenever a new president takes office. What will the economic change look like going into 2021?
The 2020 presidential election has been unlike any other. With the COVID changing the voting process, the entire election was unprecedented.
One thing that stays the same is that a new president will likely bring economic change. History says that stocks rise when a new president gets elected, no matter what party they belong to.
Will this trend continue even with the added uncertainty of a pandemic? Keep reading to find out which economic effects will take place with a new president in 2021.
New Presidency Brings Economic Change
It’s agreed that the presidential effect on the economy is pretty low. However, the stock market does go through some ups and downs whenever we elect a new president.
A win for the democrats normally means higher stocks than when the Republicans win. When the president and Congress are in the same party, stocks do better in the year after an election.
This year is different, of course, and it’s difficult to tell how economic growth will evolve. It’s no secret that good jobs are harder to come by as businesses lose a lot of profit.
With record unemployment rates, individuals in the U.S. are unable to spend money on non-essentials. Even those who have a job are less likely to spend money because of economic uncertainty and restrictions on travel, tourism, and leisure activities.
With that said, what will the economy recovery process look like with a new president in 2021? Let’s dive into the pros and cons of the upcoming presidential change.
How a New President Will Affect Our Economy
The way the new administration handles COVID will have a big impact on the economy in 2021.
Both parties campaigned a plan to jumpstart economic growth. Yet Democrats and Republicans have two different ways of getting there.
Democrats in Congress are more focused on individual stimulus checks. They believe these checks will encourage consumer spending.
Republicans are more focused on giving financial aid to businesses. They believe this approach will help the economy in a more broad sense.
The solution here relies more on the outcomes of the Senate, as they’ve struggled to agree since March.
The new president filling the open seats in the Federal Reserve will also affect the economy.
With bail-outs and checks, the Federal Reserve will need to focus on avoiding a “liquidity crisis.” This refers to a simultaneous decrease in money across many businesses and institutions.
A liquidity crisis on the horizon is no big surprise during the pandemic. A similar situation happened when the housing bubble occurred in 2008.
Final Thoughts
Now you have a better understanding of how a new president brings economic change. While COVID has added to the uncertainty of the future, remember that a new president is unlikely to have a huge effect on the economy.
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