Democrats seeking to unseat President Donald Trump would do best to pick a “middle-of-the-road” candidate who isn’t seeking a fundamental transformation of the economic status quo, a top investment banking executive said on Monday.
Tom Nides, Morgan Stanley’s (MS) managing director and vice chair, said at the World Economic Forum in Davos that the U.S. economy’s resilience has made it “hard not to be positive” about growth.
His remarks came shortly after Trump took to the Davos stage to bask in the glow of an economy that continues to churn out jobs and defy the gravitational pull of slowing global growth — even as the president gears up to fight an impeachment process unfolding in the U.S. Senate.
“People are generally optimistic but I think people are cautious because people’s view is what goes up must come down,” said Nides, a former Clinton Administration official. “I think there is a general healthy optimism with a good dose of anxiety.”
As a long list of progressive Democrats vie for the presidential nomination — increasingly tacking left in the process — Nides cautioned that a more centrist candidate will likely prevail.
“I think we’re hearing from voters that they want to win,” the banker said, as he suggested the economy would help bolster Trump’s chances.
“Let’s face it, the economy is doing quite well, and given that, people have angst about how much change they want,” Nides said.
“So I think the idea that the Democrats’ energy is certainly significant, but as an observer ... I think a middle-of-the-road candidate would be the best shot at ultimately winning the election in 2020,” he added.
No president is ‘God’ on the economy
Voters usually assign credit to a sitting president when growth is good and jobs are plentiful. However, Deutsche Bank analyst Alan Ruskin said in a research note on Tuesday that a president’s impact on the economy “is usually far less profound than widely understood.”
Ruskin’s data showed that the average growth rate for a Democrat president was 2.9%, compared to 2.7% for a Republican counterpart, but that the economy did better under a gridlock scenario, with the White House and Congress controlled by different parties.
Along those lines, Morgan Stanley’s Nides sidestepped a question about exactly which Democrat in the crowded field would be best to challenge Trump, who has repeatedly taken credit for a surging stock market.
Yet Nides issued a pointed warning for candidates who might be tempted to overreach, arguing that the Oval Office has less sway over the economy than market fundamentals.
“Presidents play an important role, but they’re not God,” Nides told Yahoo Finance.
“Markets go up and markets go down, economies speed up and economies slow down…[but] no president, either Democrat or Republican, should overplay their hand,” he added “We have to be really balanced as voters and citizens.”
Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek