In many ways, the economy is currently better than ever — so what impact will impeachment have? It’s been decided that impeachment proceedings are going to go through, though at this stage it’s impossible to guess whether the actual impeachment will work in removing President Donald Trump from office.
Of course, we’ll need to look at several factors. Even Trump’s critics cannot deny that economic numbers have never looked this positive before. And with markets known for their volatility during tense political situations, it’s reasonable to expect the gains of the past few years to be in doubt when the president seems seconds away from being pushed out.
Here’s what you need to know about how impeachment impacts the economy.
Impeachment is Incredibly Rare
The impeachment of a US president is extremely rare. Though people often think of Richard Nixon as being impeached, he actually bowed out before he could be. Only two presidents have actually been impeached before Trump: Andrew Johnson and Bill Clinton.
When Clinton was impeached, the stock market actually rose. When Nixon avoided impeachment, but resigned from office, the stock market fell. But neither was that significant of a move, and it was largely temporary.
This may also have something to do with the economic conditions arising from their presidency. Clinton was seen as a liability, whereas Nixon had already inherited a weak economy that people had a grim outlook for.
The Economic Cost of an Impeachment
Impeachment carries with it a raw cost. It’s a hugely orchestrated event, and it involves many moving parts, and many people to be paid. But the cost of the impeachment itself is not that significant: It’s estimated to weigh in at about $1.8 million, compared to the $20 million spent on the Mueller investigation.
There may seem to be two outcomes to impeachment, but there are actually three:
- Trump is not impeached: They may find no evidence to impeach him. Realistically, this would probably cause the economy to improve. The economy is already doing well under Trump, and there will be renewed confidence if Trump is shown to be not guilty, prevails within court, and remains in charge. Thus, it’s likely that a failure to impeach would prove to be good for the economy, because it will mean that impeachment was never necessary.
- Trump is impeached, and removed: This is even rarer than impeachment. Impeachment itself is more like an official sanction that states that the president was involved in wrong-doing, but it doesn’t automatically remove someone from office. Under this, the economy could suffer due to some loss of faith. The situation would be that Trump was found guilty of wrong-doing, and the economic improvements made under the Trump administration could wane.
- Trump is impeached, but not removed: This is far more likely than removal, and in this situation, the economy may actually not be altered at all. Since the economy is currently growing, an impeachment alone may not be enough to alter its course.
Impeachment is serious. But it’s not something that automatically removes someone from office, and the actual process of impeachment won’t necessarily impact the economy, especially long-term.
Short-term, the markets may end up being incredibly volatile, as many investors are going to be trying to time their investments based on the future of the administration.
The Economy Affects Impeachment, Too
Analysts believe that now is the perfect time for Trump to face impeachment proceedings, simply because the economy is currently so good. Voters don’t want to see an economic shakeup, especially when they’ve been told so much doom-and-gloom about an upcoming recession.
If Trump is able to continue to improve the economy through 2020, he will be presiding over the longest economic expansion for the country in history. And that means that the impeachment may not go through, because voters don’t want to find out how impeachment will impact the economy.
It’s not arguable that the economy is doing very well, and (in fact) much better than anyone has anticipated. Many analysts expected there to already be a recession, or there to be a recession around the corner. Against all odds, jobs are growing, the economy is booming, and everything has remained stable long-term in the markets, even if it’s volatile short-term.
With all that in mind, it’s not possible to say whether impeachment would be bad for the economy or good for it, long-term. The core issue is that it’s unknown. Right now the economy is doing well; in the future, it might not. This creates some level of fear for voters.