From Wall Street to Main Street — Politics, Economics, and Globalization

• November 2, 2020

The election cycle in the United States is unlike anywhere else in the world. We have the longest cycle – a total of 1,194 days by the time tomorrow rolls around. Unlike many other developed countries, there are no laws limiting the length of a campaign or how much money can be spent.

Whether you’re tired of the political climate, election results have a direct correlation to Wall Street and eventually Main Street. We may not pay attention to politics, but politics certainly affects all of us on a daily basis. Wall Street will be OK regardless of who wins, but many outside the famed street face more dire consequences with loss of jobs, businesses, and even housing.

I recently sat down at a C-Suite Network event with Danielle DiMartino Booth, CEO & Chief Strategist at Quill Intelligence, for a candid conversation about the effects of the election’s outcome, the ramifications for Main Street, and what trends to look out for that can predict the country’s economic future.

I started by asking her how would Wall Street react to a Biden, or Trump, victory and she stated that if the Senate flips (for the Democrats), there will be a capital gains tax increase. Should Joe Biden win, his proposed tax plan includes raising long-term capital gains tax rates and taxes on dividends to 39.6 percent, according to an article on Financial Advisor. Danielle added that investors are looking at their gains in Q4 because their capital gains taxes will be lower during the remainder of 2020.

We all know that Wall Street will recover, but what happens to Main Street?

Danielle called what has already happened to small businesses an “unmitigated disaster.” She stated that 1 in 7 small businesses are now gone with data suggesting that at least 2 percent of small businesses have disappeared, according to researchers at the University of Illinois, Harvard Business School, Harvard university and the University of Chicago. Restaurants haven’t fared any better – with 3 percent having gone out of business.

As a business owner myself, I can relate the difficulties many have gone through the past few months but I made up my mind a long time ago to push pedal to the metal and do whatever it takes to thrive with as few bumps and bruises as possible. I’ve never worked harder in my life than I have during this pandemic, but we’re starting to see some of those efforts pay off and it’s incredibly gratifying.

However, small businesses aren’t the only ones bearing the brunt of the current economic downturn. Renters are also facing nearly catastrophic results – with 42 percent of them facing eviction. Additional data shows that just under 12 million people are facing eviction in the next four months without a stimulus package.

With Congress adjourned until November 9^th, and without the possibility of a new stimulus package, renters and small businesses face an uncertain future. Danielle mentioned there are 7.9 million evictions ready to be filed and more families being at risk of being evicted than ever before.

In fact, Danielle sort of predicted this. During the conversation she said, “If there’s no stimulus spending before the election, you won’t be able to make it as a small business.”

The loss of income is also affecting white collar workers and it’s not just renters either. Homeowners are also feeling the pinch as layoffs have moved up the income ladder. By the end of the year, millions of U.S. households could owe $7 billion in unpaid rent, according to a report by the Federal Reserve Bank of Philadelphia. The Mortgage Bankers Association also reported that 6 million renters and homeowners missed their September payments.

Danielle emphasized that we have a “societal crisis in the making,” emblematic on the discourse currently taking place in Washington, DC.

The news seems grim, but there’s a glimmer of hope for those looking to reinvent themselves and create new paths to success. The word “crisis” can create panic among many, but great leaders know that is yet another test and it requires keeping your cool and your wits. Crises also serve as the perfect place to find opportunities capable of opening doors we weren’t even aware we were seeking.

Danielle says that never have we seen this “magnitude of an explosion for small business applications” according to data from the Census Bureau. Business applications for Q3 of 2020 were over 1.5 million – an increase of 77.4 percent from the previous quarter. The current situation will create a plethora of opportunities for many to join the entrepreneurial ranks in higher numbers than ever before. To me, that’s American ingenuity as its core.

As if national politics wasn’t enough to frighten the toughest of us, we also have to keep an eye on the global ramifications. As the world’s largest super power, this election “is more important to the global economy than any other in modern history,” Danielle stated. The global debt has crossed 100 percent of the GDP, which surpassed levels not seen since World War II.

She added that it’s “incumbent on the U.S. not to fail the global economy because China is depending on us to fail.” She continued, “China is focused on the U.S. stumbling” and we’re at a critical stage globally. China is closing the economic gap with the U.S. and after the election, it’ll be a time to rebuild alliances. As China’s economic power increases, who will our allies be? Who will side with China and who will side with us?

The geopolitical ramifications are very interesting and closer to home we have plenty to rebuild, including the pharma industry. We need to recognize that as a National Security issue we need to rebuild that industry because if we don’t make it a number one priority, we haven’t learned our lesson.

It was a fascinating conversation with serious undertones and ramifications, but I always enjoy talking to Danielle. Her knowledge of the industry is unparalleled and she always teaches me new facts and figures that resonate with me as a business owner.

I want to thank her for her time and insights. Listen to the full interview here.