As the US presidential election approaches, the country’s economic situation could be significantly affected by regulatory, international trade and immigration policies, according to BofA Securities.
Regulation: A reduction in government regulations can have a positive impact on business investment and market outlook. Areas of expected change include reduced financial regulations, energy policy, health care and competition law enforcement.
While these adjustments may encourage investment and increase market confidence, the overall impact on the economy is expected to be limited, with a focus on specific sectors rather than overall economic expansion.
Trade: International trade policies are expected to continue to be a central issue. The new government is expected to continue efforts to repair US trade relations, which could result in increased import taxes and changes in world trade patterns. Raising import taxes could lead to higher domestic prices and a slowdown in economic growth, especially in China and other major trading partners.
The Federal Reserve may experience difficulty managing both inflation and economic growth, potentially affecting interest rates and economic stability.
Immigration: Changes in immigration policy can have a significant impact on the economy. Tighter immigration controls could reduce the supply of workers, potentially increase wages and affect overall spending and economic growth.
However, the immediate impact may be less noticeable than in other policy areas, although it may contribute to an economic situation characterized by stagnation and inflation.
Tax Policy: The two major political parties expect the national deficit to increase, but the scope and consequences will vary depending on which party controls Congress. An increase in government spending can boost growth in the short term, but it can also lead to higher inflation and interest rates, affecting the global economy.
While all four issues – regulation, trade, immigration and fiscal policy – will influence the economy, analysts point out that trade and immigration policies likely have the most significant impact on economic performance and stability.
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