The election is almost here, and that means it is the peak of the quadrennial tradition of predicting economic doom if one candidate or the other wins. A report published on October 21 by the Brookings Institution, for example, estimated that a Trump victory would send stock prices 12 percent lower than if Clinton becomes the 45th president. However, there’s little evidence to suggest that the elections truly have such an immediate and drastic impact on the economy, let alone one that persists long-term. For example, the image below shows the FTSE Index, an index tracking the 100 largest companies on the London Stock Exchange (think of it as the British equivalent of the S&P 500). The index fell sharply on June 24th in response to Britain’s decision to leave the European Union. However, in the months following the decision, the FTSE has risen beyond pre-Brexit levels.
The same pattern holds true on this side of the Atlantic. The American economy has tended to remain very stable following elections. In the event that there are large changes in the stock market, prices generally return to normal in a few weeks. Researchers from Quartz compiled data on eight economic indicators before and after the last six presidential elections. The data shows that, although there are some slight increases or decreases in indicators around the election, the market tends to remain stable in the long term.
This is not to suggest that Clinton or Trump will not have an impact on the economy. Instead, what is likely to happen is that the policies they propose and enact will have the larger impact. One example of an area the candidates will impact is one of the largest industries in Maryland: the defense industry. Maryland has a number of military bases and research laboratories in the state as well as a large number of DOD contractors. Luckily for Maryland, both candidates have argued in favor of a strong military and reductions in sequestration. Clinton has emphasized military innovation, and an increased focus on this would benefit Maryland’s strong R&D facilities, including NAS Patuxent River, Aberdeen Proving Ground, and Fort Detrick. Donald Trump has advocated for a larger defense budget, increasing the funds available for Maryland contractors and military bases. This move would similarly help boost Maryland’s economy. Both candidates have spoken about the need for stronger and more prepared cybersecurity forces, and any proposals following through on these promises would almost certainly benefit Maryland’s strong cybersecurity resources in and around Fort Meade.
Regardless, of the outcome, even economists can predict one good thing about this election: it’s almost over.