What History Says About Presidents And Recessions

I know, I know. Everything will be “great again” come January when a flamboyant internet troll and his blondish hair piece move into the White House.

We needn’t worry about a thing; especially not the fact that the president elect’s platform is hopelessly contradictory.

Nevertheless, it would appear that some folks are a bit concerned about the prospect of a Trump administration…

immigrant

This is reminiscent of the reaction we saw after the Brexit debacle. It’s as if the electorate wanted to show its support for the protest vote but everyone was operating under the assumption that populism would ultimately be defeated. Voters wanted to have their cake and eat it too. The problem: everyone underestimated the extent to which other people were thinking the same thing. Oops.

To make matters worse for US voters, history isn’t on their side when it comes to recessions and presidents. Consider the following from Deutsche Bank:

“Before the US election results we were thinking that the US was late cycle and that the probabilities of a US recession in 2017 was perhaps somewhere between 33% and 50%. While we still think the risks are elevated, it’s fair to say that they have been reduced with the prospect of fiscal stimulus being larger than most of us thought possible only a few weeks ago. However Figure 2 sums up the uncertainty that comes with a normal US Presidential cycle and this one is perhaps even more uncertain. As you can see 9 of the 14 recessions since 1929 have arrived in the first year of a new Presidential term and 6 out of those 9 recessions have occurred when a new president has taken office. ”

gdp

Great. As if the odds of this “alt-Right” experiment working out weren’t already slim enough.

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