COVID | Politics & Geopolitics | US
Despite many firsts – the first virtual convention, the first woman of colour on a presidential ticket (Kamala Harris) – the Democratic National Convention provided no new insights into the likely outcome of the election. Instead, the perceived handling of the virus, the extent of the economic recovery and attitudes on racial inequality will be the deciding factors. President Trump’s approval ratings are already up from the June lows, and, since the economy is the one area where Trump consistently outpolls Joe Biden, a continued resumption of activity and sharp bounce back in the economy will support his re-election bid. Biden’s recent statement that he would ‘shut down’ the US economy if required to curb further spread of COVID-19 is something Trump will likely use against him.
The four-day Democratic convention succeeded in bringing in $70m in fundraising, coming on the heels of the $48m in the two days following Biden’s announcement of Kamala Harris as his VP pick the week before. More generally, the party put on a united front in support of Biden, unlike the case in 2016, and they also received endorsements from more than 20 Republican senators.
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Despite many firsts – the first virtual convention, the first woman of colour on a presidential ticket (Kamala Harris) – the Democratic National Convention provided no new insights into the likely outcome of the election. Instead, the perceived handling of the virus, the extent of the economic recovery and attitudes on racial inequality will be the deciding factors. President Trump’s approval ratings are already up from the June lows, and, since the economy is the one area where Trump consistently outpolls Joe Biden, a continued resumption of activity and sharp bounce back in the economy will support his re-election bid. Biden’s recent statement that he would ‘shut down’ the US economy if required to curb further spread of COVID-19 is something Trump will likely use against him.
The four-day Democratic convention succeeded in bringing in $70m in fundraising, coming on the heels of the $48m in the two days following Biden’s announcement of Kamala Harris as his VP pick the week before. More generally, the party put on a united front in support of Biden, unlike the case in 2016, and they also received endorsements from more than 20 Republican senators.
Trump Takes to the Virtual Stage This Week Amid Renewed Social Unrest
This week’s Republican National Convention is set to highlight what the party sees as Trump’s achievements over the past four years. Trump began on Monday evening by praising his handling of the pandemic and his stance on law and order and stated that his administration had achieved perhaps more than any other in US history. This comes as riots erupted in Wisconsin following the shooting of an unarmed black man in the back, and in front of his children. Trump’s attitude to George Floyd’s death in May and the subsequent social unrest saw his popularity drop. And, while he has previously dismissed polls as fake, he may take a more measured stance with the election now closer.
Given Monday’s new all-time high for the stock market and the improving labour market, we expect the convention speeches will focus significantly on Trump’s handling of the economy. He has already claimed success in his pledge to ‘Make America Great Again’ and will no doubt stress how Biden is a threat to the economy.
No Significant Convention Bounce in Recent Polls
Trump’s improved approval ratings over recent weeks have come alongside a drop back in prediction market odds for both a Biden presidency and a Democrat sweep in the House and Senate. The margins are nevertheless still considerably in Biden’s favour, albeit up only slightly after last week’s Democratic convention. Biden’s odds of winning the presidency stand at 59% (versus 58.65% at the start of last week), while the odds of a Democrat sweep have continued to drop, standing at 57% versus 61% a week earlier. Interesting to watch this week is whether Trump’s approval rating will bounce following the Republican convention. At 43.7%, this is up from the June lows of just above 41% but very close to the 43.6% or lower where previous president have all lost re-election campaigns. A rating of 48.4% or higher is the level where previous presidents have all won re-elections according to FiveThirtyEight. Trump has not seen his popularity at this level during his entire time in office.
A 23 August poll from CBS/YouGov put Biden 10 points ahead, while a few days earlier a poll from The Hill/HarrisX put his lead at 8 points. Overall Biden’s lead stand at 9.3 points (51.4% versus 42.1% for Trump) versus an 8.4 point lead a week earlier, though most of the improvement came from a decline in Trump’s support rather than an increase for Biden. We do not yet have updated polls for the swing states since the convention, though we will cover those in future updates.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.
Caroline Grady is a Senior Researcher at Macro Hive. Formerly, she was a Senior EM Economist at Deutsche Bank and a Leader Writer at the Financial Times.
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