Republicans have gained the required seats to take the House, ending the Democrat trifecta and setting the stage for a divided government for the next two years. Are Republicans or Democrats better for the stock market? Historically, a divided government has been positive for both the economy and the stock market. Since World War II, the average annualized rate of return for the economy during a divided government has been 2.7%, coupled with a positive 7.9% annualized growth rate for the stock market.1
Prior to the George W. Bush administration, the last time the Republicans had a trifecta was in 1953, and the last time the Democrats had a trifecta was 1993. Using this history as our measure, the U.S. has seen dramatic swings in the balance of power since the start of the 21st century. 2
You can read the full article by Senior Portfolio Manager, Director of ESG Strategies Andy Drennen in the Springfield Business Journal.
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The views and opinions expressed in this article are those of Andy Drennen and are not endorsed by, and do not necessarily reflect the views of, Simmons Bank. Simmons Bank does not provide tax, accounting, or legal advice.
Works Cited
1Trading Economics. (2022, October 17). United States Inflation Rate. Retrieved from https://tradingeconomics.com/united-states/inflation-cpi
2Board of Governors of the Federal Reserve System. (2022, October 17). Open Market Operations. Retrieved from FederalReserve.gov: https://www.federalreserve.gov/monetarypolicy/openmarket.htm