Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Investing

THE NEXT US PRESIDENT WILL SHAPE THE FUTURE COURSE OF THE GLOBAL ECONOMY
THE NEXT US PRESIDENT WILL SHAPE THE FUTURE COURSE OF THE GLOBAL ECONOMY

Published : , on

By David Absolon, Investment Director at Heartwood Investment Management

If we think about the last twenty five years, various US presidents have been defined by a specific policy agenda. For Bill Clinton it was “The Economy Stupid” – an era of free trade and globalisation; for George Bush it was the “War on Terror”; and for Barack Obama it has been the Affordable Care Act.

For the next US president, outside of the realm of foreign policy, he or she will likely be measured by how effectively US economic growth can be restored to levels that help reduce inequalities and raise the standard of living for ‘middle’ America. Large swathes of the US electorate are looking for the restoration of the ‘American dream’, an ideal that has appeared elusive to many over the last ten to fifteen years.

Of the two current candidates, Donald Trump presents an unpredictable prospect and he could bring significant change. In the short term financial markets will probably react negatively, but over the longer term a Trump presidency could be a boon to US assets if his fiscal stimulus plans, which are meaningful, turn out to be a positive game changer for the US economy.

On the other hand, Hillary Clinton is the establishment figure and with that association she brings stability. US markets are likely to respond favourably to her election in the short-term. If Clinton is able to convince a sceptical electorate that globalisation is a force for good, then this should have a lasting impact on the health of the global economy and financial markets. However, the path will be bumpy as Clinton will probably be reliant on a Republican controlled Congress, at least in the lower house.

Whoever becomes the 45th President of the United States, expectations are high that he or she will signal a new era of economic policy and reform. Tackling low productivity growth, low wages and rising income inequalities are issues not just exclusive to the United States, but also apply to many other developed economies. This is not just an election for the US, but one pivotal to the future shape of the global economy.

Three key policy areas will contribute to the success of the next US President

  • Fiscal stimulus: Democrats and Republicans both agree that a programme of infrastructure spending is needed to boost economic growth, but they disagree on how this is to be funded. Proposals to improve roads, bridges, airports and public transportation have been put forward, plus a border wall in Donald Trump’s case. Clinton has pledged an investment of $275 billion; Trump has promised to spend nearly four times that amount. Under either scenario, the next administration will commit to the biggest infrastructure investment since President Dwight Eisenhower’s presidency.
    However, the devil is always in the detail and Congressional approval will be needed. For example, Clinton has proposed paying for infrastructure improvements through a one-time lower tax on profits from multi-national corporations repatriated from overseas. US companies are estimated to have a $2.6 trillion stockpile of cash held overseas. However, President Obama has already tried to reform corporate taxes on foreign earnings to fund government spending, but his attempts were blocked by Congressional Republicans. The repatriation issue is likely to be revisited again by an incoming Clinton administration in January 2017, but political negotiations will not be easy. Both Clinton and Trump have also proposed an infrastructure bank to attract private funds and Trump has suggested lifting restrictions on energy production to generate tax revenues.
  • Trade liberalisation is a crucial issue over the coming years, particularly in light of recent downgrades to global trade forecasts from the World Trade Organisation. Both candidates oppose the 12-nation Trans-Pacific Partnership Agreement and Trump would also reverse the North American Free Trade Agreement signed by Bill Clinton. Trump has vocally called for protectionist policies, including overturning free trade agreements and introducing trade barriers to protect American industry. Not only would such policies accentuate the downward trend in global trade as US imports fall, but it would have negative consequences on developing economies which rely on external demand.
    Clinton has struck a more cautious tone, not wanting to alienate centrist voters but needing to keep Bernie Sanders supporters on board. Out of the two candidates, it would be left to a Clinton presidency to answer the anti-globalisation rhetoric, rather than fan the flames of protectionism, as would likely happen with Trump. Certainly, in terms of immigration, Clinton has made a firm stand in support of globalisation, including proposing an amnesty for undocumented workers. Trump, meanwhile, would tighten border controls and has blamed many of the economic ills in the US – low wagers and fewer job opportunities – on illegal immigration.
  • Healthcare: In terms of domestic issues, healthcare is one of the most contentious issues that divides Democrats and Republicans. A Trump presidency would overturn Obama’s Affordable Care Act. Clinton has proposed enhancements to the current legislation, including the establishment of a government-run public health plan to address limited insurer coverage in some states. She would, though, need the support of Congress to implement any changes. Larger insurers have departed Obama’s current programme as they have deemed it unprofitable. This lack of competition in a number of states is accelerating costs; the average state plan is expected to rise by 25% in 2017. Rising medical costs will impact the inflation outlook, which perhaps might not all be bad news for the US Federal Reserve looking to normalise interest rate policy.

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post