Turns out, mo’ money does mean mo’ problems for many Democratic candidates in the midterm elections– as long as those problems are part of a political agenda. This year, contributions to Democratic campaigns in the midterms have topped $1 billion, while contributions to Republican ones have only reached half of that amount. This high influx of cash has possibly contributed to the Democrats taking the House majority for the first time since 2010, which the New York Times predicts will be at a margin of almost 10%. That would be the highest margin the U.S has seen in years.

Democrats are even getting record funding in deep red districts. Kentucky’s 6th district is notoriously pro-Trump, but this year, things have been shaken up. Retired marine fighter pilot and Democratic candidate Amy McGrath received three times more funding than her opponent Andy Barr. Although incumbent Barr still took the win, McGrath walked away with 47.8% of the vote. To put that in context, Barr’s opponent in 2014 only received 40%.

 

Donations have also crossed state lines. In the Texas senatorial race, Ted Cruz received $24 million from voters, while his opponent and Democrat Beto O’Rourke received $70 million. The Center for Public Integrity reported that a chunk of O’Rourke’s donations came from notoriously blue states like California and New York. Cruz still beat O’Rourke this year with 50.9% of the vote, but in 2012, he won with 6% more breathing room.

 

However, my home state of Illinois may best exemplify the effect of campaign donations on election results. Growing up in Chicago, I knew exactly who the Pritzker family was– they have donated countless buildings, parks, and pavilions to the city. They also own the Hyatt hotels. Now, J.B Pritzker is the next governor. While his opponent Bruce Rauner is worth a measly few hundred million dollars, J.B Pritzker is worth well over $3 billion. Moreover, Pritzker’s campaign spent over $170 million dollars, while Rauner spent around $70 million. To put these numbers in perspective, University of Illinois in Chicago Professor Dick Simpson estimates that a gubernatorial campaign might cost $20 million.

So why have so many people been donating to democratic campaigns this year? Some analysts say the reason is Trump. Donald Trump is nothing short of a polarizing figure, and in an effort to take back political power, Democrats are making sure to donate. In 2018, 64% of American political contributions flowed to democratic candidates; In 2014, that number was 48%.

With Democrats pushing such a strong monetary effort this election year, it begs the question: Will donations be just as high in the 2020 presidential election? If Trump is the driving force that motivates people to dip into their pockets, the blue wave may take over.

The famous Hollywood sign, year-round warm weather, and the beautiful beaches along the coast attract millions of people to travel to Los Angeles each year. According to Discover Los Angeles, the tourism industry in this city generated this year alone $34.9 billion dollars (Los Angeles’ Tourist Industry Generates…).

What makes Los Angeles a hot spot?

As the capital of the world for celebrities, performing arts, acting, and music, you will be sure to spot your favorite artist either walking on Rodeo Drive or performing in a packed concert hall. If concerts are not your favorite, Los Angeles boasts many famous art galleries, like the Getty, Museum of Natural History, Museum of Modern Art, Los Angeles County Museum of Art, the Broad, and many more. From Los Angeles to Santa Monica, tourists can shop until they drop and recover by soaking up some strong UV rays at the beach. Within a 50 mile radius of Los Angeles County, tourist can take advantage of ski slopes, mountains, and amusement parks, as well.

The statistics by Discover Los Angeles found that 41.2 million domestic individuals and 7.3 million international travelers visited the city of angels in 2017 alone. These tourists spent $22.7 billion dollars directly into the local economy, resulting in $34.9 billion in economic impact, which include induced and indirect benefits (Los Angeles’ Tourist Industry Generates…).

How? The tourism industry in Los Angeles encourages investments in infrastructure, attractions, and hospitality, allowing the city itself to thrive, along with all the Los Angeles County residents. Tourism helps fund this county, bringing in $2.7 billion in state and local tax revenues, which in turn saves each household in Los Angeles $837 per year (Los Angeles’ Tourist Industry Generates…). This tax money is translated into improving the city.

Tourism also opens the job market. According to Discover Los Angeles, “Tourism supported 523,800 jobs in L.A. County’s Leisure & Hospitality sector, one of the area’s largest and strongest economic sectors, employing 1 in every 8.5 workers” (Los Angeles’ Tourist Industry Generates…). It is apparent that tourism is an influential economic driver for the local economy.

Daniel J. Stynes writes a report about the economic impacts of tourism and finds many direct, indirect, and induced effects on the economy from tourism. While direct effects would include hotel room sales, indirect effects would include the changes in the job market and business growth in a booming tourism region (Stynes).

Although, this dramatic increase in tourism has also resulted to inflated prices for Los Angeles residents and an increase in traffic.  The book, Global Tourism, written by William Theobald, emphasizes that people study the impact of tourism on the economy because it is “easily quantifiable and measurable. In addition, it was presumed that the income derived from tourism could make up for any negative consequences of tourism. However, over-emphasis on economic benefits have often led to adverse physical and social consequences” (Theobald). It is important for the city to take action managing Los Angeles tourism in a sustainable way.

 

Works Cited

“Los Angeles’ Tourism Industry Generates Record $34.9 Billion in Economic Impact.” Discover Los Angeles, Discover Los Angeles, www.discoverlosangeles.com/press-releases/los-angeles-tourism-industry-generates-record-349-billion-economic-impact.

Stynes, Daniel. Economic Impacts of Tourism.

Theobald, William F. Global Tourism. Routledge, 2016.

Wall Street and its investors are anxiously anticipating the results of the current midterm elections. The expected results are that the Republicans will win the Senate and that the Democrats will win the House. Many investors are hoping for this result as it would cause gridlock. This means that the existing economic agenda would stay relatively the same. If Democrats were to win both houses, there would be sharp sell-offs. If Republicans were to win both houses, then stocks may rally in favor of tax cuts. 

Many of the major banks agree that there will be a split in Congress, however each bank has their own interpretation of how the market will react to this split. The Bank of America Merrill Lynch believes that base case is a boon for equities since markets typically do well under gridlock. Goldman Sachs believes that there will be modest reactions, weaker fiscal stimulus and growth, and no major changes in trade policy. Morgan Stanley believes that a trade risk will be present regardless of the outcome of the election. (Franck)

If there is an upset and the Republicans win both houses, US equity markets will rally broadly as companies sensitive to tax cuts and de-regulation will outperform. Additionally, in bonds, 10-year Treasury yields most likely would break the high end of their recent range. The win would validate the current administration’s aggressive trade approach. Non-US equity markets would be likely to underperform since investors will pursue deregulation and more tax cuts. Finally, the win would result in a strong dollar, which would be bad for emerging markets. (Rapoza)

In opposition, if the Democrats were to win both houses, then deregulation would slow down. It would also create a higher chance of Trump’s impeachment and the creation of legislation designed to constrain Trump. (Rapoza)

There may still be some uncertainty about the elections which is causing many investors to hold back on making big bets just in case there is a surprise outcome. Despite this, Wall Street realistically has very little to worry about. In midterm elections since 1946, the S&P 500 Index has had an average price return of 16.7 in the twelve months following the elections. (Jay, Veiga) While Wall Street as a whole will not be harmed, there may be minor political shifts causing shifts in investments. For instance, shares of gun makers may change as Congress reshapes gun control laws. Additionally, there may be more possible investments in infrastructure because that is an area when Trump and the Democrats may be able to find a common ground. Adversely, pharmaceuticals could suffer because both parties favor drug price control. 

The likely outcome of the midterm elections will be gridlock. This will result in the predictable rise in investments post midterm elections and then subside to the United States continuation of its economic agenda. 

Sources:

https://www.cnbc.com/2018/11/06/heres-what-every-major-wall-street-firm-expects-from-the-election-and-how-to-play-it.html

https://www.forbes.com/sites/kenrapoza/2018/10/04/midterm-alert-what-happens-if-republicans-actually-keep-congress/#694cc3857412

https://www.detroitnews.com/story/business/2018/10/18/midterm-elections-stocks/38201061/