People complain about political gridlock, but it isn’t always a bad thing.
In fact the stock market, one indicator of the nation’s economic health, tends to perform better with divided government which is the case in America presently and may continue to be after the November elections. According to an article in USA Today, quoting the Bespoke Investment Group as a source, the Dow’s best performances from 1901 to 2014 were recorded when one party was in control of the White House and the other in control of Congress.
The true believers and partisans on both sides of the political spectrum disagree, of course, and even those in the middle complain when the government appears dysfunctional.
But as noted in the USA Today article by Paul Christopher, head global strategist at Wells Fargo Investment Institute, divided government can serve as a shock absorber for markets. “As the electorate becomes more polarized,” Christopher says, “it’s harder to get elected unless you promise extreme things. But with a divided Congress, those things are harder to enact.”
Obamacare, which even Bill Clinton the other day called the “craziest thing in the world” before walking back his criticism, never would have passed in its present form if the Democrats had not controlled the White House and both branches of Congress when it was enacted. Even its supporters now acknowledge it needs some adjustments. Whether that can best be done with some compromises in a divided government or under sweeping changes by a government controlled by one party is anyone’s guess.
With the election looming in about a month, no one knows for sure who will win the presidency. But the odds at this point favor Hillary Clinton.
Republicans, who now control both chambers of Congress, are expected to remain a majority in the House, but they could lose the Senate.
Here in Mississippi it’s a foregone conclusion that Donald Trump will carry the state’s electoral votes, and all the congressional seats except Democrat Rep. Bennie Thompson’s will remain Republican.
But everyone should pay attention to the congressional elections, especially for the Senate, in the rest of the country. They could be almost a important as the presidential race.
