Reexamining Reelection
The occupant of the White House can significantly impact business, even if the president’s party lacks control of Congress. Wouldn’t it be useful if there were a guideline to forecast the next president of the U.S. more accurately than simply watching the news and polls? Perhaps such a framework exists.

Chart for AOM​​​

  • It is said that people often vote with their pocketbooks. Could it be that a driver of reelection campaign success or failure over the past half century has been real disposable income growth per capita (inflation adjusted and after tax)?

  • Historically, sitting presidents have been reelected by a larger margin when real disposable income per capita was growing more. As evidenced by the chart above, when real disposable income growth per capita was 1.7% or greater, incumbents historically got reelected and at over 4%, a landslide usually occurred.

  • Today real disposable income per capita is growing at approximately 2.4% but decelerating, making it difficult to predict whether the current U.S. president may be reelected. Real disposable income growth per capita may be an important metric to follow in the next 12 months. Come next November, it may prove very telling.

The views expressed are the views of Fred Alger Management, LLC as of November 2019. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, LLC. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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