It’s been a little over a week since the election, and I wanted to take a moment to share some post-election thoughts and what might come next. The markets have responded quite positively, and we’ve received some questions about why that is the case.
To put it simply, there are three main reasons, two short-term and one long-term.
Clarity on Election Results
The market doesn’t necessarily care who won; it cares that there is a clear winner. Businesses, strategists, accountants, and CPAs can adapt, but they need to know who will be setting policy for the next four years. The decisive outcome of this election brings clarity, reducing uncertainty—very different from the ambiguous outcome in 2020. This is the first key factor.
Policy Impact on the Economy
In the intermediate term, I believe some of Trump’s policies will benefit the American economy. And while there may be divisive issues around his personality, history, or social policies, the economic policies he champions—smaller government, reduced spending, and potentially lower taxes—I believe are economically beneficial. When money stays in the hands of Americans rather than Washington, it’s spent more wisely and effectively.
Long-Term Demographic Trends
The third point is a longer-term issue, specifically demographics. We have the aging Baby Boomer generation who is 76 million strong and well into retirement and importantly, out of their peak earning years.
The generation that follows them, Gen X (which I’m part of), is significantly smaller—about 45 to 46 million people by comparison. We are currently in our peak earning years, and paired with the massive drop in demographic size, we are actually seeing less total spending power than the Baby Boomers in their peak earning years.
This leads me to Millennials–an even larger demographic of 81 million. Despite initially struggling with student debt and delayed career starts, millennials are now entering their prime earning and spending years. This demand, particularly in areas like housing, is nearly unprecedented and is a key driver behind current economic trends. A massive increase in people in their peak earnings years is good for the economy.
In summary:
- Short term: The clear election result provides stability and certainty.
- Intermediate term: Proposals for smaller government and lower regulation are economically favorable.
- Long term: Demographic trends, with large numbers of baby boomers and millennials spending and investing, are setting the stage for substantial economic growth.
While there may be concerns beyond 2050 or 2060, the next 5 to 20 years show promising economic tailwinds due to these demographics.
Thank you for spending a few moments with me today. At Vizionary Wealth Management, we’re here to help you Envizion More. Don’t hesitate to reach out with any questions.