Why Trump's underdog status is good for the economy
Trump's second term as president is likely to be in full swing explosive economic growth That could surprise financial markets and Fed officials.
This conclusion comes from reading surveys of voters, consumers, and businesses in recent weeks, and the uncertainty surrounding the election, and even Vice President Kamala Harris' prediction of victory, is cloudy. It has been shown that suppress economic activity And Trump and the Republican Party are more trusted when it comes to economic issues.
2 months ago Trump was the clear favorite to win the election.. According to a YouGov poll, economist Mid-July Found Fifty-two percent of registered voters said Trump is likely to win. Only 31% of Americans considered Harris likely to win. A University of Michigan consumer sentiment survey conducted for the three months ending July 17 found that 48 percent predict 44% expected Trump to win, while 44% expected Biden to win. CNBC Chief Financial Officer Survey Found In the second quarter of this year, 58% said Trump would win, while just 12% said Biden would win.
Each of those investigations is now support harris victory. Latest YouGov poll find Forty percent of voters expected Harris to win, compared to 35% for Trump. According to a University of Michigan poll, 58 percent of consumers say harris will win34% say Trump will win. According to the CNBC CFO survey, 58% currently Harris says he will win.31% expect Trump to win.
On the surface, that sounds like bad news for Trump. But please remember These studies are not always the most predictiveespecially the chief financial officer survey. These executives typically did not earn their positions through political foresight. In a September 2020 poll, two-thirds said Trump would win, while only a quarter said Biden would win. In a September 2015 survey of CFOs, 78% said Jeb Bush would win the Republican nomination, but none.zero–I said Trump would win.
Consumers are getting a little better at predicting. Back in August 2016, 69% of consumers predicted Only 26% expected Hillary Clinton to win, and just 26% predicted Trump would win. But in 2020, consumers got it right. predicted With Biden's victory, 48% said they thought Biden would win, and 47% said they thought Trump would win. Historically, consumers have a pretty good track record of predicting wins. The 2016 mistake was a rare one.
Upside surprise from Trump victory
However, consumer expectations and CFOs Expectations also affect the economy. According to the latest CFO survey, 55% say Trump is better for the economy, even if they expect him to lose. Given that scenario, CFOs are expected to: start withdrawing investment plans A reaction to the growing prospect of worsening economic policy. And sure enough, the Federal Reserve Banks of Richmond and Atlanta recently found that nearly one in three CFOs postponed, scaled back, or canceled investment plans because of the upcoming election.
Similarly, most surveys of voters show that Trump is seen as better on the economy than Harris.. For example, a recent Gallup poll found that Republicans outperformed Democrats on the economy, with 46% saying Republicans were doing better and 41% saying Democrats were doing better. A University of Michigan poll found the opposite was true, with Harris leading Trump 41% to 38% on economic issues, but tied on the question of who is better for personal finances. not confirmed According to other research.
What this means is that Trump's victory will be considered as A pleasant surprise for CFOs and consumers. The immediate aftermath of the election will likely see a positive reappraisal of the outlook for the coming years, with further investment, spending and an increase in economic confidence expected.
Is it familiar? That's exactly what happened after President Trump's unexpected victory in 2016. consumer sentiment index jumped off It rose from 87.2 in October, the last monthly reading before the election, to 98.2 in December, the first monthly reading after the election. This was the index's highest reading since January 2004. The number of consumers who spontaneously mentioned the expected positive economic impact of President Trump's policies was at a record high.
Richard Curtin, head of the survey at the time, said: “When asked whether they expected more or less economic growth over the next year, 43% of people expected economic conditions to improve in early December, compared to last month. 31%, up from 21% last year.” .
If President Trump is able to disappoint consumers and business leaders once again, we will likely consider: Trump boom again In markets and economics.
