How Will the Presidential Election Affect Economic Growth?
By Kyle Brandon
It’s tough to get a handle on where the U.S. economy is heading. News headlines present conflicting data points that often obscure as much as they clarify. And in a presidential election year, clarity about the future can be even harder to come by.
In hopes of offering a clearer picture on the economic outlook, SIFMA’s Economic Advisory Roundtable, a 22-member panel comprised of leading financial institution economic experts, published its Mid-Year 2016 U.S. Economic Outlook on June 14.
Panel members were surveyed for their views on a variety of topics, such as economic growth, monetary policy, interest rates, and oil prices. Among their top-line findings:
Economic growth: With weaker-than-expected GDP growth in the first half of the year, economists say they expect overall U.S. growth to come in at 1.8% in 2016, and to climb to 2.3% next year.
Jobs: An improving employment picture could be a bright spot — survey respondents expect the annual average jobless rate to fall from last year’s 5.3% level to 4.9% in 2016 and further to 4.6% in 2017, with 2.3 million workers added to payrolls this year and 2 million in the next.
Interest rates: Roundtable members don’t expect an interest rate hike in the immediate future. Over 90% of respondents predicted the Federal Open Market Committee would not raise its target interest rate range during its recently held June meeting. They anticipate the next rate hike in either the third or fourth quarter of this year.
And of course, the question on many readers’ minds: with a contentious political season shaping up as the two major party leaders move toward securing their respective presidential nominations, how will the November election affect the economy?
Opinions from the roundtable survey were mixed, with a narrow majority of respondents seeing uncertainty surrounding the election outcome as having an impact on growth:
A slim majority (57 %) agreed that the upcoming presidential election would impact GDP growth, largely through the suppression of both consumer and business spending due to uncertainty. One respondent noted the “election uncertainty add[s] to the list of worries making business cautious.” Other respondents, however, were unsure: one respondent noted “[w]e have seen an impact on business and consumer surveys thus far but no measurable impact as yet on the real economy.”
Check out the full report on the Mid-Year Economic Outlook for more.
*Kyle Brandon is Managing Director, Director of Research at the Securities Industry and Financial Markets Association.
