By Jim Gold
If your wallet could vote, which presidential candidate would it choose?
Democratic front-runner Hillary Clinton and presumptive GOP nominee Donald Trump both say they have plans to grow the economy, create jobs and offer tax relief to middle-class families and small businesses. They differ on how they would achieve those goals.
Trump touts better trade deals with China and a simplified tax code, along with a border wall with Mexico and Obamacare repeal, among his plans to “Make America great again.”
Clinton says she would invest in infrastructure, clean energy, and scientific and medical research as well as close corporate tax loopholes and make the wealthy “pay their fair share.”
So if it’s “the economy, stupid,” as Bill Clinton campaign strategist James Carville winningly put it back in 1992, under which candidate’s rule would you most likely flourish?
“If your wallet could vote, I think you’d vote for Clinton because Trump is just such an anomalous candidate,” says Robert Johnson, economist and president of the American College of Financial Services, which educates 1 in 5 U.S. financial advisers. “We know his platitudes but not any of the specifics. Still, certain sectors of the economy may fare better under Trump than Clinton.”
In a recent interview with Money Talks News, Johnson — co-author of “Invest With the Fed” — wanted to make clear that he was not advocating for either candidate.
Wall Street faced with uncertainty or the devil they know
“It’s a choice between two pretty unattractive alternatives,” he said, noting their high negative ratings in recent polls. Examples include a Fox News poll, with 56 percent giving Trump an unfavorable rating; Clinton, 61 percent. FiveThirtyEight.com, which analyzes polls, says Clinton and Trump are “both more strongly disliked than any nominee at this point in the past 10 presidential cycles.”
Johnson generally echoes Wall Street, which is betting on Clinton, if only because she offers a greater expectation of stability.
“While conventional wisdom about the market is often neither conventional nor wisdom, it is right when it comes to saying the market dislikes uncertainty,” he said.
“With Trump, you have somebody very volatile,” Johnson said. “Business fears that we don’t know what we’re getting. He’s said he would repeal trade deals, deport Mexicans, and punish corporations that move outside the U.S. He then one-upped himself when he floated the idea to renegotiate the debt. Here we have somebody who hasn’t thought things through.”
Trump has said he would tell Federal Reserve Chairman Janet Yellen “You’re fired!” and would order an audit of the agency.
Of course, Johnson notes, the Fed is audited regularly and in his view has done “an admirable job, if not masterful job, helping economy and the market recover” since the Great Recession of 2008.
With Clinton, he said, “it’s the devil that you know. Wall Street is holding its nose and supporting Hillary.”
The only thing worse to Johnson from a Wall Street perspective: “A Bernie Sanders presidency would be received by Wall Street even more negatively than a Donald Trump presidency, as Sanders is clearly anti-business. But, unless something happens to Hillary Clinton, that is inconceivable.”
Merrill Matthews, resident scholar at the Institute for Policy Innovation, a Texas-based, right-leaning think tank, praised Trump’s tax plan as dynamic and pro-growth, according to The Street. “You would find a huge amount of new business investment and companies willing to put their money out there to begin growing the economy.”
Winners under Trump
If Trump wins, Johnson predicts these sectors would benefit compared with what would happen under a Clinton presidency:
- Traditional energy: Coal, natural gas and oil companies would be under more pressure from Clinton.
- Mergers and acquisitions: A backlog of proposed mergers and acquisitions exists because of the uncertainty of what would be allowed. The Federal Trade Commission recently blocked an effort to combine Office Depot and Staples. The climate will be more conducive to M&A with a Trump presidency.
- Technology: Many tech firms are sitting on enormous cash piles. Much of the M&A will likely happen in the technology sector as firms put that cash to use in a friendlier M&A environment.
- Minimum wage companies: Companies such as fast food restaurants will gain because a minimum wage hike is less likely under Trump than Clinton.
- Large pharmaceutical firms: A Trump victory would likely mean less regulatory pressure than a Clinton victory. A tweeted pledge by Clinton last September to crack down on “outrageous price gouging” by drug makers wiped some $162 billion off the once high-flying Nasdaq Biotech index within a week.
Winners under Clinton
If Clinton wins, Johnson predicts these sectors would do better than if Trump wins:
- Renewable energy: Solar and wind power would flourish as traditional sources would come under greater pressure.
- Hospitals: With an expansion of Obamacare, more likely under Clinton, more previously uninsured people would avail themselves of health care services, driving up business for hospitals and other providers.
- Aerospace and space: Clinton is more hawkish than Trump, whose tone is more isolationist. Despite Trump’s talk about building up national defense, the industry would likely see more expansion under Clinton.
- Guns and ammunition: Sales would soar with a Clinton White House, as they have for seven years under President Barack Obama, due to fears over curtailment of gun rights. Trump, addressing the National Rifle Association upon its endorsement of him, said Clinton “wants to abolish the Second Amendment,” a statement that Politifact has rated as “false.”
- Consumer staples: If Clinton, who advocates raising the minimum wage, gets more money in the pockets of individual workers, they will in turn largely spend that money on consumer staples, food and beverages.
Is the economy the most important issue to you? How do you weigh leadership qualities, social values and stands on issues? The nonprofit League of Women Voters offers a guide to help you sort through your priorities and the positions candidates are taking — whether considering the U.S. presidency or the local city council.
What’s important to you? Who do you think would be better for your wallet? Share your thoughts in comments below or on our Facebook page.