Our analysis shows that higher turnout from the black population could swing the election in Joe Biden’s favor
Although Covid-19 remains front and centre for most investors, November’s US presidential election is set to share the limelight in the coming months. The outcome may have significant implications for the US stock market and economic policy.
Race and racial inequality have always been a major social issue in the US. But the death of George Floyd and subsequent rise of the Black Lives Matter movement has propelled race relations to the top of the political agenda. Some polls suggest that, when it comes to campaign issues, race is now on a par with the economy and health care.
What’s more, if black voters are spurred into action to vote on 3 November, our analysis suggests that it could spell the end of the Trump administration.
Black voters are a significant demographic for the election, representing 13% of the US electorate. Not only this, turnout amongst black voters had been rising relentlessly until 2016, when it fell by 7% (Chart 1).
So, can Black Lives Matter renew interest and bring a higher turnout in black voters?
Based on historical voting patterns, higher turnout in black voters – along with Hispanic and Asian voters – would help Biden. Black voters in particular have historically favoured the Democratic party. In 2016, nine out of every ten black votes went to Clinton and one went to Trump – giving Clinton an eight vote lead (Chart 2).
A 7% rise in black voter turnout across all states would make a fundamental difference to the election. For example, using 2016 estimates of black voting patterns for Pennsylvania, this would add 56,000 votes to the Democratic party. This is more than Trump’s margin over Clinton in 2016, so would flip the state from Republican to Democrat. In fact in 2016, Trump won by such a narrow margin in key swing states that a 7% rise in turnout in each state would flip Pennsylvania and Michigan to Democrat – 36 electoral college votes – costing Trump his majority.
But 7% was the average fall in turnout amongst black voters across the US. The fall was disproportionate in some states; only 2% in Michigan but 11% in North Carolina. If turnout returns to 2012 levels in the key swing states, this would make an even larger impact. Comparing once again to 2016 margins, Trump would lose Florida, Michigan and North Carolina. Amounting to 60 electoral votes, this would again, cost Trump the election.
Either way, it is clear that the black vote matters. If black voters – along with other minority voters - are spurred into action to vote in November, historical voting patterns suggest this would likely be a key factor in swinging the vote towards Biden.
We cannot rule out that Republicans also raise their turnout at this election for any number of reasons and provide a boost for Trump. But particularly as the black vote fell so significantly in 2016, when we consider the impact of Black Lives Matter alone, we think it will prove more beneficial for Biden in November.
The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.