Millennials, Midterms, and Markets

If Democrats want any chance of winning a majority in Congress next year, they need to rally millennials to vote for them. A tall ask for mid-term elections, as 80% of this cohort stayed home in the 2014 midterms.

Here is how the 2016 presidential election compared to prior elections, courtesy of The Center for Information and Research on Civic Learning & Engagement, a nonpartisan academic research center:

#1 Presidential election turnout: In 2016, millennials voted at a similar rate to 2012 (nearly 50%), but turnout was “higher (55%), in the aggregate, in eleven ‘battleground’ states that were projected to be competitive in the presidential contest or have a tightly contested Senate race.” Young voters were also as racially diverse as in the prior election, but there were “more college-educated youth than the general youth population”.

#2 Breakdown of party support: Four out of ten millennials do not even associate with a political party. The share of Republican-identified young voters has remained the same in the last three presidential elections, while fewer young voters identified as Democrats than in the two prior elections even though more consider themselves as liberal. By contrast, young independent and third-party voters continue to increase and helped Barack Obama’s overall youth vote in 2008 and 2012 as he won a majority of young independent/third-party voters.

Fast forward to 2016, and even though there were a greater number of independent or third party voters, Hillary Clinton only managed to get 49% of this electorate compared to 17% for a third party candidate and 33% for Donald Trump. Moreover, Clinton only received 41% of young independents’ votes “who consider themselves ‘moderate,’ and less than half of young Independents overall who view the Democratic Party favorably (45%).”

#3 Profile of the youth vote for each candidate: Trump’s greatest youth support came from white, less educated males who live in rural areas. Nearly three-fourths of Trump’s youth vote came from those who wanted a President to bring “needed change”. Clinton received the most support from “youth of color without college degrees” in urban areas. Ultimately, she did not receive the level of support President Obama got in 2008 and 2012 even though she won youth overall. One potential reason: almost half of Clinton’s own voters (41%) were “bothered ‘somewhat’ or ‘a lot’ by the allegations surrounding her private email server, and 36% viewed her as dishonest”.

#4 Mid-term election turnout: Only around 1 in 5 millennial eligible voters cast their ballots in the 2014 midterms, so each party needs to start reaching out and engaging this demographic as soon as possible for 2018. Consider that one of CIRCLE’s millennial polls prior to the 2016 election found that “just weeks before Election Day, only 30% of youth had been contacted by a presidential campaign or political party”. One hope for Democrats is that even though their youth support has declined since 2008 “55% of young voters reported supporting a Democratic House candidate, compared to 40% for a Republican candidate. Young people of color were also far more likely to support Democratic House candidates than young Whites.”

Bottom line, Democrats are losing favor and Republicans are not gaining much favor with millennials. If anything a growing share of millennials want a new party. Democrats and Republicans need to find a way to appeal to young voters if they want to win over the long haul as millennials represent the largest American generation. As for what this could all mean for the 2018 mid-terms, here are a couple of recent millennial polls on their current thoughts after President Trump’s first year in office:

#1 Almost half (44%) of millennials (aged 18 to 34) believe President Trump is performing as expected during his first year in office, according to a recent NBC News/GenForward survey. Forty-five percent said it has been worse than anticipated and 8% think he is doing better.

The numbers get grimmer: 63% of millennials disapprove of Trump’s job performance, “another 41 percent and 32 percent, respectively, say they are concerned or scared about what he has done so far in office”, and 50% think history will look back at him as a poor President.

That said, just 3 in 10 millennials think who is President makes a big difference to their personal life and less than half (47%) believe it makes some difference. One potential obstacle for either party needing a share of the growing number of millennial independents: this group was more likely than young Republicans or Democrats to say who is President has no difference on their own lives (35%). Democrats need to figure out how to change this view if they want to win.

#2 The NBC poll also found that most millennials (71%) think a third party is needed because Republicans and Democrats do not do an adequate job governing. Six in ten also disapprove of Congress, with 59% viewing the Republican Party unfavorably and 42% viewing the Democratic Party in a negative light. No surprise, therefore, that 74% of young Democrats and 75% of young independents believe a third party is needed; 67% of Republicans think so as well.

#3 Sixty-five percent of likely millennial voters (aged 18 to 29) said they would rather see Democrats control the House and Senate compared to 33% who favor Republicans, according to a poll by Harvard Kennedy School Institute of Politics. Another sign of hope for Democrats, 66% of Independent millennial voters favor a Democratic majority in Congress compared to 32% for Republicans.

Why does this all matter to investors? Stocks could continue rallying in 2018 with the passage of legislative action related to deregulation and infrastructure spending. If Republicans no longer control the Senate or House in 2019, this could create gridlock and delay or derail any hopes of progress especially on the deregulation front. Given the rally in equities into the end of this year, investors do not seem to think that will happen. But who knows, maybe the Democrats have something up their sleeves, particularly with millennials.

Sources: CIRCLE, NBC poll 1, NBC poll 2, Harvard poll