President Obama, be careful what you wish for! Back in 2008 the President campaigned on ‘change’. This time around, the theme is ‘forward’. We got change, but that may not necessarily move us forward, unless we change again. I’m not going to get into politics here, but since we are in the midst of political convention season (ending Thursday Sep. 6th) and it is nearly two months before the election, let’s take a look at how the economy and some of its components may be better off with a new leader in the White House.
For the last five quarters the US economy has grown at an anemic clip, averaging 2.5% over that time. That represents the worst recovery following a recession in quite some time. Productivity has lagged severely while unit labor costs are on the rise, and of course the administration and Congress cannot seem to put something together to put a dent in the stubborn unemployment situation, where 23 million are still looking for work.
Much of the help and lifting to the economy was supported by a strong Chinese economy. Well, that growth is now coming into question. So, 2.5% growth over the last five quarters with influence from Asia – imagine how bad it might have been without that crutch. The future may not look much better, and with Europe still trying to figure things out we can see where our tepid growth rate may be at risk.
So, what might a change in leadership bring? Over the last 50+ years a new President has generally brought an increase in consumer confidence, sentiment, productivity and spending. Since 1960 there have been nine changes at the top and all brought with it a renewed spirit and energy, pride in being an American and hope for the future.
Of course, once the honeymoon period subsides then reality bites and the hangover begins. This is generally the process, but let’s say some change this time is accompanied by real action and reform, to carry the momentum longer than just a short honeymoon period? Might that be the game-changer?
Bob Lang is the Senior Market Strategist for option trading newsletter Explosive Options