Market Insight

Post-Election Analysis and Outlook

Though all political races are not yet fully tabulated, the Republican party has wrested control of both the White House and the Senate. By retaining the majority in the House, Republicans now control the Executive and Legislative branches of Government. While the Supreme Court theoretically maintains impartiality (and obviously there is no voting mechanism for the highest Judicial branch of government), the conservative majority within the Supreme Court means that all three branches, including the Judiciary, are now in Republican hands and will be for at least the next two years. While there may still be some discussion on the magnitude of this Republican “win”, there is little question voters favored the Trump agenda and Republican platform. Post-election polling suggests the primary issue on voters’ minds were current and future economic concerns. Voters expressed a higher degree of faith that Republicans would better tame inflation, produce higher wages, reduce housing costs and protect jobs.

As we have suggested for some time, the United States economy is sound and expanding. Third quarter GDP grew 2.8%, just under the second quarter’s rate of 3.0%, but more than the first quarter’s rate of 1.6%. Though October’s employment report was weaker relative to expectations, the reason is easily explained by two major hurricanes in the South and a large union related strike. Both conditions no longer exist. The unemployment rate stands at a healthy 4.1%. The average increase in monthly employment stands at 194,000 for the prior 12 months. Though inflation has been reduced to levels considered appropriate and manageable by the Federal Reserve, many families continue to struggle with high food and housing costs. In large part, these “too high for too long” costs prompted the election results in hopes that changes will be made reduce pricing pressures for many essential, daily expenses.