SUMMARY

● Against the backdrop of a weakening growth recovery and a second wave of the COVID-19 pandemic, the outcome of the US presidential election on 3rd November will be ever more crucial.

● While the incumbent President Trump seeks to extend his current policies, his opponent, former Vice President Joe Biden proposes plans to increase taxation, government spending and environmental regulation. Both candidates will maintain a protectionist trade stance, but at differing degrees.

● Latest poll shows Biden is ahead of Trump in both national and swing states. However, we do not discount the possibility of Trump being re-elected given the US is practising an electoral college system which could undermine popular votes.

● A Biden win could generate improvement in the jobs market and the US fiscal position, bringing forth a more stable economy and boosting the USD in the long term.

Introduction

● The US 59th quadrennial presidential election on 3rd November would determine the state-level popular vote. Then, on 14th December, in line with the result of each state’s popular vote, the presidential electors would either vote into office a new president or re-elect the incumbent for a second four-year term. The candidate with at least 270 electoral votes (nationwide: 538 electors) wins the presidency.

- President Donald Trump of the Republican Party is defending his presidency with his re-election campaign themed

“Keep America Great” and “Promises Made, Promises Kept”. Running against him is the former Vice President Joe Biden of the Democratic Party, with a rallying call for unity amidst the most divided political environment in the US since the Civil War on a campaign slogan “Unite for a Better Future” and “Build Back Better”.

- From the latest polls’ result, this election could lead to the first defeat of an incumbent president in 28 years, which historically is a rare occurrence. It had only occurred five times in the last 100 years, with the Democrats toppling Republican presidents four of those times.

● Election to be held against a backdrop of a weak economic recovery as the US continues to grapple with the COVID-19 pandemic.

- The final jobs report (Sep) ahead of the election suggests stalling labour market recovery, as evidenced by the smallest job creation (661k) in five months and the highest pre-election unemployment rate of 7.9%.

- Looking at jobs created by previous presidents in their first 44 months in office, Trump ranks the lowest, with 3.9m jobs lost between Jan-17 and Sep-20.

- While the massive job loss is due to the unprecedented pandemic, it still does taint the economic records of the Trump administration, as citizens argue that government has handled the pandemic poorly, with delayed and inadequate actions.

▪ The latest COVID-19 figures showed that new cases continued to climb in the US. According to data compiled by the Johns Hopkins University, the US recorded nearly 79,000 new cases on Wednesday, which was close to an all-time daily high reported last week. In total, the country has recorded nearly 8.9m confirmed COVID-19 cases, while the death toll stands at more than 227,000.

Policy Stance Comparison

● President Trump seeks to continue his policies of lower taxation, trade protectionism and general deregulation. On the other hand, should Biden be elected, it is expected of him to reverse Trump’s policies on healthcare, environmental regulation and taxation. Biden is also in favour of substantially more government spending than Trump. Meanwhile, their trade policies are quite similarly aligned under a protectionist stance

Source: Kenanga Research - 30 Oct 2020