This is the first of a series of articles looking at the US elections on 3 November 2020 and their implications for the economy, financial markets and sectors.
While markets have understandably focused mostly on the virus outbreak, which is a critical issue from a short-term perspective, the US presidential and congressional elections matter a great deal from a longer-term point of view. The results are likely to impact the economy, financial markets and key sectors.
This is not only because they will ultimately dictate what kind of fiscal boost could be used in early 2021 to mitigate the impact of COVID-19. It is also because a Democratic sweep – the outcome polls currently forecast to be the most likely – may result in extra public investment, which could have a meaningful multiplier effect on economic growth. But it could also result in higher corporate taxes – a direct hit to earnings. In addition, Biden’s policy platform could lead to greater government involvement in healthcare and measures to fight climate change.
US ELECTIONS LIKELY TO DETERMINE QUALITY AND QUANTITY OF FISCAL STIMULUS
Source: Quintet, National Governments
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