September 01, 2024

Up to the end of August the race for the White House is an even one. The data presented here shows that in the past the different combinations of control of the executive and legislative branches have produced vastly different economic performance. Hence it behooves investors to keep track of the political developments that alter the likelihood of different combinations for they portend a different economic outlook. For example, the data reported in Table 2 shows an increase in the likelihood of a trifecta at 52%. The data shows dramatic increases in the likelihood of a trifecta by either party. A result suggesting that people are returning home and are going to vote along party line. Table 3 also shows that not all trifectas are created equally. That the Democratic trifectas tend to underperform the post-war averages while the Republican trifectas tend to outperform the post-war averages. Viewed from this perspective the changes in the likelihood of the trifecta are a bullish development. Although the odds of a divided government have declined, at 48% the odds of a divided government remain quite high and are analogous to the flip of a coin. Again, the changes in the likelihood of a divided government were not uniform or similar. Table 2 shows that the likelihood of a divided government led by a Democratic President declined to 30% from 35.36% and the likelihood of a divided government led a Republican president declined to 17% from 34.82%. Again, as before, Table 2 shows that the odds of a Democratic led divided government are nearly twice that of a republican led divided government. Table 3 show significant difference in the performance of Democratic and Republican led divided governments. Although it shows that a Democratic led divided government underperform the Republican trifecta, it outperforms a democratic trifecta. Therefore, the increase in the likelihood of a Republican trifecta and a decrease in the likelihood of a Republican led divided government is a welcome and bullish development.

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