Conference Presentation, Fireside Chat, Interview
US presidential elections outlook: Implications for policy and markets
- The 2024 U.S. presidential election occurs on November 5, marking a year where over half the world's population will vote.
- Historical data indicates that markets typically experience weakness at the start of presidential election years due to uncertainty, followed by strength post-election.
- S&P 500 returns in presidential election years average 8% since the mid-1970s, compared to an 11% average across all election years.
- The Republican primary season begins with Iowa caucuses on January 15, followed by New Hampshire on January 23, Nevada on February 8, and South Carolina on February 24.
- Donald Trump is the projected Republican nominee, with polling suggesting he is likely to win Iowa with vote share hovering near or above 50%.
- Nikki Haley's strategy to challenge Trump relies on winning New Hampshire, where the electorate is more moderate and independent than Iowa's conservative base.
- If Haley fails to secure a convincing win in New Hampshire or South Carolina (her home state), her campaign is expected to end before Super Tuesday on March 5.
- Trump faces 91 indictments across various cases, which he characterizes as a "political martyrdom" narrative that has improved his standing among Republicans.
- Legal proceedings create logistical challenges for Trump, including court arguments in Washington D.C., town halls in Des Moines, and closing arguments in New York within the same week.
- While legal cases strain campaign finances and calendars, current polling suggests the indictments have not materially altered the Republican primary or general election trajectory.
- Key voter issues currently favor Republicans on the economy, inflation, crime, and immigration, while Democrats hold an advantage on abortion.
- Consumer confidence regarding the economy remains low because voters focus on price levels (e.g., cost of milk and gas) rather than inflation rates, which have normalized.
- President Biden starts the election with 226 projected electoral votes, while Trump has 219; the outcome hinges on seven toss-up states.
- Arizona, Georgia, and Wisconsin are identified as the critical states, having separated the 2020 candidates by a cumulative total of approximately 44,000 votes.
- Third-party candidates, specifically Robert F. Kennedy Jr., are polling at low-to-mid 20% levels in key states, significantly higher than in 2016 and 2020, raising concerns for Democratic victory margins.
- Voters who "somewhat disapprove" of President Biden currently favor him over Trump by low double digits in general election polling, a demographic that historically swung toward the opposition in previous midterms.
- In the House of Representatives, Democrats currently hold a slim two-seat majority, but upcoming redistricting efforts could allow them to gain a handful of seats.
- Republicans hold a structural advantage in the Senate, defending no vulnerable seats while Democrats face difficult re-election battles in West Virginia, Montana, and Ohio.
- The 2025 fiscal policy outlook centers on the expiration of 2017 Trump tax cuts, which represent over 1% of GDP.
- A Republican-controlled Congress is expected to extend all expiring tax cuts, whereas a divided government scenario might extend them with a tilt toward middle and lower-income taxpayers.
- Donald Trump has proposed a 10% across-the-board tariff that could generate over $300 billion, potentially funding domestic subsidies even without full Congressional support.
- Goldman Sachs views an all-Democratic sweep as less likely than a divided government or an all-Republican scenario.
- Potential market volatility is anticipated if the election outcome is close, with risks of legal challenges, recounts, and protests similar to the 2020 aftermath.
- The program concludes with a disclaimer that opinions expressed are those of the speakers and do not constitute financial or legal advice from Goldman Sachs.