Can Election Impact Stock, Bond Portfolios?
The former Loudoun school board member ponders economic prospects of fall presidential campaign.
Now that the opposing presidential tickets are established, let's take a minute and try to prognosticate how either group prevailing may affect our savings. This article is intended to trigger thought, not convince anyone to act or emphasize one party over another. Any conclusion also depends on the type of bonds or stocks one holds. Municipals rooted in state revenues from bridges and tunnels are much less risky than a local town-built overpass, for example.
If the concept that it is actually good for the economy for the government to spend more than $1 trillion per year over revenue levels, the dollar will continue to be weak, which is good for global firms who sell substantial amounts of their goods overseas balanced by what this takes out of the U.S. economy purchasing power. If that spending is to support the continued heavy involvement of the U.S. military rebuilding foreign countries, then oil will remain high as well, which depletes U.S. purchasing power as our disposable income goes toward higher petroleum costs.
If the concept of restricting the current expansion of government-related jobs Virginia, sees a slump in housing demand, the overall unemployment rate will likely rise. For those of us over 50, neither party is helping to modify the reality that employers avoid hiring older employees as actuarial costs of retirement and medical expenses have never been higher. I wonder when politicians will consider restructuring the American Medical Association's stranglehold on what is requires a medical license versus what could be done by nurses and other medical personnel. Has anyone looked at what increasing the supply of doctors while lowering the threshold of access to regularly taken drugs or basic medical tests would do to Medicare costs?
If interest rates go up slowly because foreign sovereignties stop buying treasury paper, lower quality taxable bonds values will drop; but, if this is combined with higher progressive tax rates or a change in tax policy toward new bonds being issued, then municipal bonds may continue to rise in value.
If oil prices spike without a release of the ethanol-required component, we may see food and fuel prices erode consumer disposable income to the extent that store closures intensify. Why politicians haven't connected that usurping corn production for fuel production instead of importing sugar directly is unfairly taxing the poorest of Americans by artificially raising the cost of basic foods and gasoline.
I hope this short article shows that details count. Spending trillions more than revenues and blindly cutting, unless its to simplify the tax code, are both untenable and would hurt our investments as well as challenge our livelihoods. Any politician who uses pronouns of persuasion instead of conscientiously defined and executable verbs should be shunned or else the next four years we will watch our savings continue to be depleted whether they are stock or bond based.