US Election 2024: Economic Implications on the Horizon

US Election 2024: Economic Implications on the Horizon

The US presidential election of 2024 will likely have critical global economic consequences.  A range of different outcomes is also set to affect trade, fiscal spending, and the effects of monetary policy on the economy.

A Democratic Victory means increased government spending on programs for social services and the infrastructure. This should activate the economy in the short-run, but only at a cost of potentially higher rates of inflation and interest.

A Republican Victory could lead to tax cuts and less governmental regulation, thus increasing corporate investment and economic growth perhaps more rapidly. However, this could also encourage greater wealth disparity and a higher national deficit.

Regardless of the outcome, this is going to affect the rest of the world simply because an election in the United States could go very significantly in creating instability and confusion in markets across the globe. Higher levels of political uncertainty could result in more volatility as investors lose confidence. US changes in trade policies would cause many problems to global supply chains and increase difficulties across international borders.

As the US election approaches, it is crucial to keep informed and closely monitor market movements as the real economic impact will depend on several factors.

Upcoming ISM Non-Manufacturing PMI Signal Potential Shifts in U.S. Service Sector

The Institute for Supply Management is set to report the Non-Manufacturing Purchasing Managers Index (PMI) today. The indicator surveys activity across more than 400 companies in the service sector of the U.S. economy and could reveal patterns in finance, healthcare, and retail. The index is expected to be 51.6, down from 54.9 in September, indicating that growth may be slowing.

The ISM Non-Manufacturing PMI benchmark is 50-with any reading above that signaling expansion and below signaling contraction. If the number aligns with expectations, this could indicate softer demand within the service sector, which could affect investor sentiment toward the US dollar. A break lower could make the market price in a more subdued economic outlook, thereby affecting how well the dollar holds versus others.

The broad-based approach of the report's survey, combining private and public sectors through NAICS classification, often provides a rather comprehensive view of economic activity. However, if this index falls by more than forecast, that might create speculation about the Federal Reserve revising its policy or if the economy can withstand it. A small rise above expectations, however, would then support a more optimistic near-term growth in the sector.