Here's what the Democratic election rout could mean for the U.S. economy

The biggest forces shaping the economy aren't going to change just because the party in power did.

Here's what the Democratic election rout could mean for the U.S. economy

TL;DR

  • Democratic election victories may not drastically alter economic policies related to trade, spending, and AI.
  • Affordability issues, substantial government spending, and AI-driven growth are persistent economic factors that pose risks.
  • Economic policy is largely determined by the executive branch, and President Trump's policies are expected to continue.
  • Key economic concerns include inflation, a labor market that is not functioning well, and geopolitical dangers.
  • Despite strong GDP and consumer spending, inflation and negative real wage growth are significant problems.
  • There may be bipartisan agreement on tariffs, potentially leading to legislative action rather than executive orders.
  • High levels of government debt and budget deficits are expected to remain, with national debt at $40.5 trillion.
  • Policy uncertainty tied to executive actions on tariffs, geopolitics, trade, and deregulation is likely to continue.
  • Democrats might use debt ceiling impasses to seek policy concessions, potentially including tariff rollbacks and spending cut reversals.
  • Most of Wall Street anticipates continued economic expansion, with a low probability of recession in the next 12 months.