Want to know who will win the US election? Look at the stock market | 2024 US election

Want to know who will win the United States presidential election? Look at the stock market.

Of course, no crystal ball will tell us who will win on November 5.

Polls, as reliable as they are, show Vice President Kamala Harris and former President Donald Trump running neck and neck in what many observers believe could be the closest election in decades.

However, the performance of US stocks has a poor history of predicting the outcome of presidential elections.

Since 1928, the S&P 500 – which tracks the performance of the 500 largest listed firms in the US – has identified a winner in 20 of 24 polls, according to an analysis by financial services firm LPL Financial.

When US stocks rose during the three months before election day, the incumbent party retained the White House 12 out of 15 times. And the incumbent has lost eight of the last nine times the market was in the wrong place leading up to the vote.

Not a bad record as forecasting models go.

With less than two weeks until the election, the S&P 500 is up a healthy 11.8 percent since early August.

Assuming US stocks don’t fall dramatically in the final days of the campaign, the historical trend clearly favors Harris.

However, there are many caveats.

Unfortunately for Harris, voters don’t seem to associate strong stock market performance with a well-performing economy.

Although about 61 percent of Americans own stocks, a large portion of the electorate has no exposure to the stock market.

In an Associated Press-NORC Center for Public Affairs Research poll released this week, 62 percent of registered voters, including a majority of Republicans and independents, rated the state of the economy as “bad.”

On Harris’ positive side, voters expressed growing confidence in the Democrat’s ability to handle economic issues, suggesting that Trump’s once-clear advantage on the economy has disappeared.

The gloom that exists despite the fact that, by many metrics, including gross domestic product (GDP) growth and the unemployment rate, the US economy is operating at a rate that would be the envy of many developed countries.

One of the most plausible and often given reasons for the negative outlook is that consumers are tired of high prices – although inflation, which fell last month to 2.4. percent, is now close to the Federal Reserve’s target after a spike during the COVID-19 pandemic.

Although wages have been growing faster than inflation for more than a year, they have not grown enough to completely offset the rise in the cost of living since the pandemic.

While prices rose nearly 20 percent between January 2021 and June of this year, wages rose only 17.4 percent, according to a Bankrate study using Labor Department data.

Although wage growth has continued to outpace inflation since then — coming in at 4.2 percent compared to 2.6 percent in the July-September period — Bankrate predicts the post-pandemic gap won’t fully close until the second quarter of 2025.

No matter how many good economic statistics are released to trumpet the record of the current administration, consumers are reminded that the prices of everyday items are more expensive than they are used to every time they are at the supermarket.

Another good reason to be cautious about reading too much into the predictive power of the stock market is that we seem to be living in a political era that doesn’t follow any rule book.

As his 2016 victory broke many precedents, Trump’s place on the Republican ticket, despite four criminal convictions, numerous scandals and years of negative media coverage, defies conventional wisdom.

Indeed, the last time the S&P 500 failed to predict the next person in the White House was the most recent election.

After overseeing a market gain of 2.3 percent, Trump lost to President Joe Biden.