Originally published by Peak Commercial (peakcommercial.com)
Many experts say the United States economy has performed “well enough” over the first half of 2024. There are plenty of job opportunities. The stock market rose by 15% in the first half of the year. The risk of a recession is low. Even so, the economy continues to top the list of voter concerns. Gasoline, which cost just over $3 per gallon at the beginning of the year, costs almost $3.50 per gallon as of mid-July. Food prices are over 2% higher than they were in 2023. Unfortunately, since the FED hasn’t hit its 2% annual inflation target, rates remain unchanged, making it difficult if not impossible for many people to buy a home.
Both political parties claim to have the answer to economic concerns. Republicans want to jumpstart the economy by lifting restrictions on drilling for oil and gas in the United States, raising tariffs, and making the 2017 Tax Cuts and Jobs Act provisions permanent once they expire next year. Democrats, on the other hand, want to raise taxes on billionaires and corporations, expand the Childcare Tax Credit, invest in infrastructure, and raise the minimum wage. Unfortunately, the end result of either platform is similar. While economic growth will most likely accelerate no matter who gets elected in November, inflation will likely accelerate too. The deficit will also most likely grow during this time, hitting 122% of GDP by 2034.
Granted, the election will have an impact on some aspects of economic performance. This is particularly true if one party gains control of the White House and both Houses of Congress. Experts predict that the high tariffs Trump is promising would result in slow economic growth and an increase in domestic prices. Trump’s promise of mass deportations, if he’s able to keep it, would create an acute worker shortage, triggering supply chain shortages that would raise prices on goods nationwide. The hospitality, restaurant, and farm industries would be particularly hard-hit. If Democrats gain control of the House of Representatives, they may be able to prevent Trump from enacting some of his policies; however, many of the things he wants to do can be done via the use of executive powers.
On the other hand, a Democrat-controlled White House and Congress would likely result in the creation of policies that would boost GDP. However, as the Congressional Budget Office points out, the Democrat Party’s push to raise the minimum wage would have a mixed effect. The number of families living in poverty would decrease. However, poor families would likely see a net reduction in average family income. Furthermore, many economists warn that a rise in the minimum wage would lead to an increase in unemployment and raise the cost of goods and services produced by low-skilled workers. Experts note that if a Democrat takes control of the White House, but Republicans control one or both Houses of Congress, economic growth would be hampered by restraints on discretionary spending.
There are so many factors that could affect future economic conditions that it’s impossible to predict what will happen in the future with 100% accuracy. Some of these factors can be controlled by the party that wins re-election in November. Others are out of national control. International turmoil and natural disasters, for instance, can have an outsize impact on economic conditions no matter who wins the Presidential election. Even so, barring unforeseen circumstances, it is clear that neither party can solve all the problems the economy is facing now and in the next few years. While some relief is on the horizon, challenges such as inflation and high deficits will likely continue to plague ordinary Americans to some degree for the foreseeable future.
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