Heading into 2020, the U.S. presidential election looked set to be one of the biggest stories of the year. The coronavirus pandemic drastically changed that narrative, pushing politics aside as a health care crisis triggered the worst economic downturn since the Great Depression.
With the U.S. election now less than 100 days away, however, investors are turning their attention back to the November 3 ballot. Amid rising COVID-19 infections, a battered economy and civil unrest in several U.S. cities, President Donald Trump is trailing former Vice President Joe Biden by a wide margin in major polls.
Many pundits are already predicting a resounding defeat for the incumbent president, but it’s far too early for investors to anchor on that outcome, says Capital Group veteran political economist Matt Miller.
“We have more than three months to go before the election. That’s a lifetime in politics,” Miller says. “Given the rapid pace of developments and a compressed news cycle, we could have many turns of the wheel between now and November. In my view, the race will tighten as the Republican and Democratic campaigns shift into overdrive.”
Election scenario planning
For long-term investors, the outcome of U.S. presidential elections hasn’t mattered as much as staying invested and maintaining a diversified portfolio. Markets have tended to power through presidential elections — with some volatility along the way — regardless of whether a Democrat or a Republican won the White House.