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The Exodus Continues — To Texas and Florida, Away from California

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Insights and Market Perspectives

The Exodus Continues — To Texas and Florida, Away from California

Author: 8

December 7, 2020

NEWS THIS MORNING THAT GOLDMAN SACHS may move its asset management division from New York City to Florida got us thinking about the major political shift that will come after this year’s census. The winners in the 2024 election — and in upcoming congressional redistricting — will be Texas and Florida; a high-profile loser will be California.

THE COVID IMPACT: The raging pandemic has shown that many people can work from home, a signal to cost-cutting companies that they don’t need to maintain expensive locations in places like midtown Manhattan. Many big Northern cities, besieged by crime and high taxes, are experiencing an outflow.

THE TREND BEGAN EVEN BEFORE THIS YEAR’S PANDEMIC AND SOCIAL UNREST: AllianceBernstein announced in 2018 that it was moving to Nashville, and an exodus out of Silicon Valley to Texas already was underway before the virus hit. Several hedge funds and money managers are looking for property north of Miami.

WHILE FLORIDA IS EXPECTED TO GAIN TWO ELECTORAL VOTES, the jackpot will go to Texas, which will get three more votes, bringing its total up to 41 seats, second in the nation to California’s 55, soon to drop to 54. There’s no individual state income tax in Florida or Texas, while the top rate in California is a staggering 13.3%.

AFTER DECADES OF POPULATION GROWTH, California will lose an electoral vote and a congressional seat for the first time in the state’s history. It’s still the most populous state in the nation, with just under 40 million people, but deadly fires, high taxes and decay in San Francisco and Los Angeles have taken a toll.

AND THERE’S BEEN AN EXODUS FROM NEW YORK CITY, mostly to the suburbs, since the virus hit. Before then, there was a decade-long migration from the Tri-State area to Charlotte, Austin, Nashville and of course Florida. For the first time ever, Florida soon will have more electoral votes and congressional seats than New York state.

ADDING SEATS AND ELECTORAL VOTES: In addition to Texas (3) and Florida (2), one-seat winners are expected to include Arizona, Montana, North Carolina, Oregon and Colorado. One seat losers other than California are expected to include Alabama, Michigan, Ohio, Pennsylvania, West Virginia, Illinois, Massachusetts, New York and Rhode Island.

THE POLITICAL IMPACT: With Texas and Florida becoming more powerful, that’s a plus for Republicans because they’re doing significantly better with Hispanic voters in those states.

THE ECONOMIC IMPACT IS CLEAR: With interest rates close to zero, as the Fed promises accommodative policies for three more years, real estate will remain red-hot in booming Texas and Florida, not to mention in cities like Charlotte and Nashville. The dramatic American migration continues to move southward.
* * * * *
STIMULUS UPDATE: Details on a compromise deal may be released today, but this process will take time. There’s a consensus that the package, lasting until April 1, should cost about $900 billion, but progressives like Bernie Sanders want more, while conservatives in the Senate want less.

TO COMPLICATE MATTERS, the vehicle for a stimulus bill will be the massive budget deal, which isn’t finished yet; an extension past the Dec. 12 midnight deadline may be required. Bottom line: a pandemic bill is still likely — especially after Friday’s mediocre jobs bill — but we’re not expecting a final deal until well into next week.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2021 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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