While Barack Obama leads Senator John McCain in almost every national poll, there’s at least one constituency the Illinois Senator has yet to win over: Economists.
21 out of 29 economists polled by Reuters believe that the stock market would fair better under a McCain administration. Reuters:
The sample includes a cross-section of U.S. financial institutions, large and small, including several prominent Wall Street names…
“Preserving the capital gains and dividend tax rate (at) 15 per cent is in my view very important to investors and therefore very important to Wall Street,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York, explaining why he thought stocks would fare better under a McCain presidency.
Reuters’ poll follows a similar study in the Wall Street Journal earlier this year which revealed that economists preferred Republican candidates almost 3-to-1. Their faith may be misplaced, however, since the data suggests that there is no statistically significant difference between stock market returns under one party than under the other. A study by the Federal Reserve Bank of San Francisco concluded:
Over the years, stock analysts have suggested that the market prefers Republicans in the White House. This apparently arises from the view that Republican administrations are more favourable toward business than Democratic administrations… We find, contrary to earlier belief, that there is no support for returns being different under one political party versus the other. The old adage that the market prefers Republicans is not evidenced. On the contrary, the evidence indicates a slightly, but not statistically significant, higher returns during Democratic administrations.