Of course the election has nothing to do with such events.

Nope, it was sheer coincidence that the head of the Securities and Exchange Commission (SEC), Harvey Pitt, just happened to resign Tuesday night at the very moment when ballots nationwide were being counted.

And just because the Federal Reserve Board sharply cut important benchmark rates the day after the election and not at its meeting a month earlier does not in any way suggest a preference for one political party or another. The discount rate -- the rate at which banks can borrow money overnight -- went from 1.25 percent to a Japan-like .75 percent, the lowest level seen since July, 1961.

No sir. It was just happenstance. The luck of the draw. Serendipity.

Sure. And Bigfoot is going to join you for breakfast tomorrow.

Political trends and officeholders can powerfully effect realty values. The decision to set property tax rates at a given level, to approve or disapprove a state-wide "smart growth" policy, or to establish national programs which impact jobs and interest rates all influence real estate demand and thus prices.

On a national level, those with an interest in real estate and politics would like to see:

• Full employment. When lots of people have jobs home prices rise as flush bidders compete for properties. The October unemployment rate was 5.71 percent and 8.2 million people were out of work, not hideous numbers but worse than most months during the past five years. Still, of course, more than 94 percent of us do have jobs and that is very good news.

• Low interest rates. Low rates make homes more affordable and also allow buyers to purchase more expensive homes. While rates have been marginally- lower during 2002, at this time they're surely attractive when compared with interest levels seen during the past 30 years. The catch is that mortgage rates are set by the marketplace, not government, which means that politicians are praised when rates decline and criticized when mortgage rates rise -- even though their ability to influence such trends is limited.

• Public moods. You want the public to be in a buying mood, to feel good about the economy. This is an issue of psychology and politics but, alas, consumer confidence is now at a nine-year low. The Conference Board's Consumer Confidence Index, which has declined for four consecutive months, stood at 79.4 in October, down from 93.7 in September. Consumer confidence, says the group, is at its lowest level since November 1993.

While the housing market remains strong and zero-interest car loans keep auto factories humming, much of the rest of the economy is merely stolid -- like Old Man River it just keeps rolling along with modest growth, negligible inflation, and high levels of employment. Most countries around the world would be elated to share such circumstances.

The latest election cycle has now been completed and the results are in: Republicans control the House, the Senate, and the presidency. That's as good as it gets if you're a politician on the winning side.

But the great thing about elections is that they end. It's easy to carp about government and policy while out of office or not in control, but once in you have a problem: The electorate actually expects campaign promises to be kept and things to improve, otherwise in two years we'll have a new cast of characters in power.

By every sensible standard the economy is now at a point where problems lurk but for the most part people are doing well. That said, there is the issue of expectations. After you've made 20 percent a year in the stock market it's not easy to accept 2 percent -- or an annual loss.

In the public mind Republicans and political conservatives now hold the levers of power. If things get worse in the next two years there simply won't be any way to blame Democrats or political liberals -- the reverse of what we've seen in this election cycle.

If this scenario sounds familiar, it is. It was in 1994 that Republicans and political conservatives took control of Congress and in 1995 Newt Gingrich became both speaker of the House and Time magazine's Man of the Year. The Republicans continued control of the House in 1996 and 1998, introduced the "Contract With America," and cut taxes. By 1999 Newt Gingrich was a private citizen.

Voters. They always seem to ask, "what have you done for me lately." It's both a political question and an economic issue. For the winners of the latest election, congratulations -- now the ball's in your court.

For more articles by Peter G. Miller, please press here.

Published: November 12, 2002

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