Democrats and Republicans have finally found something they can agree on: The biggest threat to the U.S. economy will happen in November.
According to a national survey released this week by personal finance site Bankrate.com, 61 percent of respondents point to the upcoming presidential election as the greatest near-term risk for economic growth.
Notably, that view cuts across the partisan divide that dominates American politics these days, cited by 68 percent of Republicans, 60 percent of Democrats and 61 percent of Independents.
“Congress can’t seem to agree on anything, but the American people do,” said Greg McBride, Bankrate’s chief financial analyst. “There’s a lot of uncertainty leading up to election day. There’s even uncertainty after election day because it’s a new administration no matter who wins.”
Bankrate surveyed more than 1,000 people.
All presidential elections have economic implications, of course, with the results potentially affecting everything from trade and tax policy to Social Security and health care. But the unusual nature of this year’s race seems to be heightening anxiety, including in the business community.
More than a third of chief financial officers around the U.S. say that political uncertainly is likely to tighten the spigot on corporate spending even beyond election day, according to the latest Duke University/CFO Global Business Outlook.
If they’re right, that could slow economic growth. Indeed, more than a quarter of U.S. firms polled as part of the survey said they are already delaying investment decisions.
For now, by contrast, investors aren’t obsessing over the election, said Moody’s Analytics Chief Economist Mark Zandi. And that stands to reason. After all, even if the White House remains in one political party’s hands and Congress in the other’s next year, that isn’t necessarily bad news for investors. According to Bank of America-Merrill Lynch, the S&P 500 index has historically performed better during Democratic presidencies with a split Congress.
As of Tuesday, the S&P 500 has posted a year-to-date gain of 4 percent, and stock prices have hit a succession of record highs.
In some ways, the fractious political environment in Washington could even benefit the economy, or at least insulate it from more serious harm.
Oxford Economics, a research firm associated with Oxford University, recently estimated that a Trump win in November could result in a 5 percent decline in U.S. GDP over five years -- if, that is, he succeeded in ramrodding much of his agenda, including a more protectionist trade policy and large, through a reluctant Congress.
The economic and market impact would be more limited if, as seems likely, Trump failed to pass some of his more extreme proposals, such as sky-high tariffs on China.
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