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Blue wave likely: Goldman Sachs economics: election victory of the Democrats under Biden positive for the US economy | message


Turn around for US Democrats
According to surveys, Biden has the edge

The advantages of a “blue wave” should predominate

The incumbent US President, Donald Trump, is considered a very business-friendly politician, which is why the market was already speculating at the time of the primaries this year whether another candidate would win in the US election could have a negative impact on the US economy in November. What few people on Wall Street expected at the beginning of the year: that there could be a turning point for the Democrats, because this way of thinking has changed noticeably.

Goldman Sachs chief economist Jan Hatzius points in a note to recent polls suggesting that Trump’s challenger Joe Biden has built a clear lead over the incumbent president while the Democrats are in a strong position to recapture the US Senate.

Democratic “blue wave”

A possible election victory for Joe Biden and “a democratic ‘blue wave’ in which the party controls both the White House and Congress” are more likely, according to the Goldman Sachs economist. This should put the US economy under pressure – because corporate taxes could, for example, be increased under the control of the Democrats – but the benefits of an aid package against the economic consequences of the corona pandemic, which is expected to take place shortly after the inauguration of the President’s arrival on January 20th.

“If all else is equal, such a blue wave would likely lead us to revise our forecasts. The reason is that the likelihood of a fiscal stimulus package of at least $ 2 trillion soon after the president’s inauguration on Jan. 20 would rise sharply, followed by longer-term increases in spending on infrastructure, climate, health care and education, which should at least coincide with the likely longer-term tax increases for companies and people with higher incomes, “ quotes the expert.

Overall positive effects

According to Hatzius, the election victory of the Democrats under Joe Biden is likely to have “mixed” effects on the US equity markets, but overall it is likely to have positive consequences, such as “much simpler US fiscal policy, a reduced risk of renewed trade escalation and firmer global growth prospects”, accompanied. In particular, cyclical sectors and companies that pay most of their taxes outside of the US should, in his opinion, benefit from this development.

Goldman Sachs is not alone with a positive outlook

Goldman Sachs is not alone in his view. As reported by CNN, Moody’s Analytics found that Biden’s economic ventures, if they went into effect, would create 7.4 million more jobs than Trump’s. The economic outlook is strongest in the scenario where Biden and the Democrats take over Congress and their economic agenda is fully adopted.

“We see a ‘blue wave’ as the most likely outcome of the election,” CNN quoted UBS strategists as saying in a statement to clients. editorial team

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