Wikipedia defines Federalism in the U.S. as “the constitutional division of power between the U.S. state governments and the federal government.” Federalism is complicated in practice and has been an area of contention since the beginnings of the U.S. Over time, power has shifted away from the states and toward the national government.
While still contentious, federalism may have some tangible benefits as the country seeks to emerge from the economic pressures associated with combating Covid-19. While Covid-19 affected every state, the extent of the pandemic varied widely and now, as states loosen restrictions, the approach to recovery has also varied widely.
This should provide investors and the responsible authorities with valuable insight as to what works and what doesn’t.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA