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What the Election Could Mean for Your Business and the Economy

Economists commonly say that the course of the economy doesn’t depend very much on who sits in the White House. But as the chart below demonstrates, this election could be different.

election-3We asked prominent economists for their predictions about the economy based on the two major candidates’ stated policies on their campaign websites and in speeches and interviews. This chart contains GDP predictions for each year of the candidates’ first term, as well as a few predictions of unemployment rates and S&P 500 levels. Moody’s Analytics economist Mark Zandi gets two predictions:

One in which he reflects what would happen if the candidates’ stated policies were implemented without changes, and one in which he reflects his prediction if the candidates’ policies are modified by a “somewhat skeptical Congress.” Zandi considers the latter the more likely scenario for both candidates. Our panel includes independent economic advisors, as well as economists who have counseled or worked under Republicans. Nonetheless, we found a general feeling that the economy—and business—would fare better under a Clinton presidency.


THE ROUND UP
All of the economists noted the vagueness of Trump’s proposals, with Baumohl suggesting that Trump’s unpredictability would hurt business confidence. Zandi and Daco were especially worried that Trump is proposing huge spending increases but also large tax cuts. This, they said, could widen deficits and ultimately push up interest rates. If the deficit were ultimately financed through spending decreases, that could also hinder growth, Daco said.

The economists were also concerned about the implications of Trump’s protectionist and anti-immigration stances. A clampdown on trade would result in a “shock to business confidence” and could also push up interest rates, Swagel noted.

The departure of millions of immigrants would cause an “already-tight labor market” to get even tighter, pushing up labor costs, Zandi stated. As for Clinton, Zandi and Daco contended that her immigration-reform proposals would boost the economy by enlarging the labor force. Her spending proposals would boost growth and her tax proposals would have only a small impact on consumer spending because they fall mostly on the wealthiest taxpayers, who spend a relatively smaller proportion of their income, they said.

Both are also concerned about her stated opposition to the Trans-Pacific Partnership, but suspect she may ultimately change her tune. Moreover, Baumohl notes that several groups have concluded that Clinton’s plans will not substantially increase the federal debt.

Swagel, who worked in the Treasury Department under George W. Bush, said that he hopes Trump would ultimately defer to Mike Pence and Paul Ryan, “who do have a vision for how to increase growth.”

As for Clinton, he says, “I don’t see anything in her agenda to restart business confidence.”

Click on chart to enlarge.

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Read more:
An Election Like No Other

About Richard Sine

Richard Sine
Richard Sine has had a 20-year career in journalism and content marketing.