We are getting closer to the US election
Yesterday saw the first presidential debate between President Trump and VP Harris, and with the election less than 8 weeks away, we thought it might be time to look at how the policies of each candidate are shaping up.
Cheat sheet of each candidate’s (mostly) economic policies
Below is a summary of each candidate’s (mostly) economic policies. If you want a bigger summary of social policies and other positions, a good place to look is this article from the Wall Street Journal:
Source: Wall Street Journal
Both sets of policies expected to boost federal deficits by $1+ trillion
Seeing these policies, one big question for the economy and markets is: What do they cost?
Recent analyses from UPenn suggest the answer is “a lot.”
- Harris’ policies are expected to increase the deficit by$1.2 trillion over the next 10 years.
- Trump’s policies are expected to increase the deficit by nearly $6 trillion over the next 10 years. Although this doesn’t include potential tariff revenues, which others have estimated could increase net revenues by $2.8 trillion. That means Trump’s policies would add $3 trillion to the deficit.
Initial results suggest Harris “won” debate, but time will tell
Flash polls suggest Harris “won” the debate (63% for Harris, 37% for Trump), and PredictIt election odds moved from a dead heat pre-debate to Harris up 57-47 (chart below).
Of course, what matters most is who wins the “swing states.”
Data going into the debate showed Harris had a narrow lead in 5 of the 7 key states (chart below). But it will take a few days for more comprehensive polls to show if the debate really moved the needle one way or another.
The true cost will depend on if we see one party sweep or divided government
Of course, it’s not just the president who gets elected.
For the policies above to get enacted, we probably need to see a Democratic or Republican sweep.
Other polling data shows a divided government is much more likely. That means some of these policies likely get watered down or don’t get enacted at all. In that case, the impact on the deficit will be smaller.
Uncertainty ahead
Either way, we should expect some additional market uncertainty in the next 2 months. That often makes it hard for markets to rally. Although the good news is markets usually recover once the election is over and future policy becomes more certain.
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