Stock photo of the White House
Stock photo of the White House
Financial Health
May 20, 2021

The next 100 days

Wells Fargo Investment Institute analysts weigh in on the economic impacts of President Biden’s first 100 days in office, and what they expect looking ahead.

An administration’s first 100 days, a benchmark first coined under former President Franklin D. Roosevelt, can offer a preview of a president’s leadership and management performance. Under the current administration, this period was marked by the record $1.9 trillion American Rescue Plan stimulus package in response to the pandemic, which paralleled economic strides from the times of FDR as well.

Four printed pages representing the WFII report referenced in the story legible words include 'President Biden at the 100-day mark' and 'Wells Fargo'
The report looks back at President Biden's first 100 days in office and offers insight on his next 100 days.

During the next 100 days, the impacts of those first 100 days, especially on the markets and the economy, will also be notable, strategists conclude in Wells Fargo’s Investment Institute’s latest report, “The Biden Administration at the 100-Day Mark (PDF).”

Gary Schlossberg, global strategist with the Wells Fargo Investment Institute, or WFII, expects the weeks and months to come will be marked by President Joe Biden acting to broaden the initiatives introduced in the first 100 days, beyond pandemic containment and fiscal stimulus.

While Biden’s first 100 days were considered a fast start — with the stimulus plan supercharging the economy and an accelerated vaccination rollout releasing pent-up demand for long-delayed spending on services — the markets and the economy are likely to remain in a holding pattern while the administration’s plans continue to take shape. The administration may extend initiatives to more underlying social and economic goals of income and social equality, enhancement of labor income, and climate change, economists say.

Responses to the first 100 days

Man in dark suit jacket, white shirt, and dark red tie smiles at camera
Gary Schlossberg, global strategist with the Wells Fargo Investment Institute (WFII)

Investors have given the new administration a vote of confidence, as evidenced by a market rally far stronger than average for the first 100 days of any president since 1933, according to the newly released Wells Fargo Investment Institute report. This growth and confidence was seeded in the months prior to the start of the Biden administration, Schlossberg said. 

“The market has been on a roll since early November when the vaccine was first announced,” Schlossberg noted. “So the stimulus package introduced in Biden’s first 100 days supercharged a rally that was already in place.” 

Combined with stimulus packages from the previous administration like the CARES Act, the economy has seen a growth period unlike any since 1984. This growth was also likely buffeted by the vaccine allowing people more ways to spend money. 

Job gains in February and March were very strong, economists noted in a May 2021 U.S. Economic Outlook, although employment growth downshifted in April. The high-gear employment activity at the start of the year was fueled by an improving health picture, better weather, and the fiscal support delivered by Biden’s stimulus package. 

Investors and the market also seem to be responding favorably to the proposals from the new administration currently on the table. Markets are showing no adverse response to the American Jobs Plan and the American Families Plan, further social spending programs which would also include infrastructure investments and tax revisions.

“The market has been on a roll since early November when the vaccine was first announced. So the stimulus package introduced in Biden’s first 100 days supercharged a rally that was already in place.” — Gary Schlossberg

How investors may respond in the current environment

In January, WFII strategists extended a favorable view of equity sectors beyond Information Technology and Communication Services to economically sensitive sectors, including industrials and financials.

“We had recommended moving into the economically sensitive sectors of the market,” Schlossberg said. “Once we had word of the vaccinations, we saw the light at the end of the tunnel.”

WFII is now extending the tilt toward risk assets beyond U.S. stocks to commodities and emerging market equities centered on Asia.

Yield-enhanced sectors of the bond market, such as preferred and mortgage-backed securities, are also favored over a reach for yield in longer-term Treasury securities.

Municipal revenue bonds, or “munis,” also recommended, are expected to get added support from an increase in the top personal tax rate under Biden’s latest fiscal proposal by adding to the value of tax-exempt income.

“We had recommended moving into the economically sensitive sectors of the market. Once we had word of the vaccinations, we saw the light at the end of the tunnel.” — Gary Schlossberg

Biden's successful debut among investors

A graph shows the S&P 500 performance during Biden’s first 100 days in office versus other post-World War II presidents.
Stock market response to Biden’s first 100 days compared to performance under past presidents. Sources: Strategas Research Partners, LLC, Wells Fargo Investment Institute, April 15, 2021. Infrastructure stocks are primarily from the industrials and materials sectors of the stock market index. Past performance is not a guarantee of future results. An index is not managed and not available for direct investment.

What to watch for in the next 100 days

Markets and the economy are likely to remain stable tracking on their current course, strategists say, as the direction of the policies being laid out are determined. And if policy is executed in favorable ways for the economy, the prospects are good for increased productivity and growth.

“I think the markets recognize this period doesn’t have to be unending,” Schlossberg said. “We could see the market performance flatten out, but even the Fed is cooperating by keeping interest rates low.”

Experts are tracking the fate of the Biden administration’s American Jobs Plan, an eight-year, $2.25-trillion spending proposal with funding for transportation, water, broadband, power, and other policy items. The impact of this initiative, which also includes proposed tax increases primarily concentrated on the corporate side of the tax code, could provide a modest boost to real GDP growth, inflation, and employment in the short run. Its longer-term effects are more uncertain.

The policies, including the Jobs Plan that Democrats and Republicans will grapple with in the near future, which deal with infrastructure, social programs, and longer-term changes in corporate and income tax structures, will likely not impact the economy for many years to come.

“The negotiations for the two stimulus packages proposed could likely be drawn out,” Schlossberg said.

Prospects for upheaval could include unforeseen events, such as major geopolitical shifts. The WFII report also details how strained relations with other nations, such as China and Russia, present some possibility for adverse impacts on U.S. markets.

“I think the markets recognize this period doesn’t have to be unending. We could see the market performance flatten out, but even the Fed is cooperating by keeping interest rates low.” — Gary Schlossberg
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