Wall Street giant Goldman Sachs has predicted the potential economic implications of a Republican or Democratic victory in the November 5 presidential elections in the US. It claimed the country's GDP may face a hit if Donald Trump secures a second term in the White House, reported Reuters.
In a note on Tuesday, economists at the investment bank stated that the economic growth of the US would likely witness the biggest boost in the coming two years from a Democratic government, headed by Kamala Harris, Reuters reported.
The economic output would take a hit next year, majorly from the increased tariffs on imports as well as tighter immigration policies, if the Republican Party comes to power, even with a divided government led by the former US president, they said.
As per Goldman Sachs, there will be more job growth in the US under a Democrat government than the Republicans.
If Trump sweeps the polls or even manages to form a divided government, in that case, "the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, resulting in a peak hit to GDP growth of -0.5pp in 2025H2 that abates in 2026," it said.
If Democrats get another term then the new spending and expanded middle-income tax credits will slightly be more than the "offset lower investment due to higher corporate tax rates", the Wall Street behemoth believes.
This will result in a "very slight boost to GDP investment due to higher corporate tax rates." Ultimately, this will give a little boost to GDP growth on average over 2025-2026.
"If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-2026," the news agency quoted the note from the company.
If Harris wins, the job growth will be 10,000 a month higher compared with Trump's win with a divided government, and it will be 30,000 higher in comparison with a sweep by the Republicans, as per Goldman estimates.
The US' core inflation is likely to rise as a Trump win may lead to increased tariffs on auto imports from China, Mexico and the European Union, it added.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
