Trumponomics or Kamalanomics ?
As the US presidential campaign enters the home straight, the outcome looks to be tighter than ever, judging from the polls and the bookmakers. After surfing a wave of popular support in the weeks following her surprise nomination, Kamala Harris is seeing this trend undermined and the polls are now particularly undecided in the swing states that are key to the outcome of the election.
Despite the support of a favourable economic record inherited from Joe Biden – for whom she was Vice President – the White House candidate is struggling to capitalise on this success. Inflation now under control at 2.4% year-on-year, the country close to full employment (unemployment of 4.1%), sustained growth of around 3.5% p.a. between 2021 and 2024, and stock markets sailing from record to record – all this is still not enough to convince voters. The inflationary wave that reduced the purchasing power of US consumers between 2021 and 2022 and the drying up of the excess savings of the COVID years for 80% of the population have undoubtedly helped taint perceptions of the economic record of the Biden-Harris team.
Whilst the outcome is uncertain, the campaign nonetheless makes the economic consequences of the election result quite clear.
Whilst there are broad differences in the programmes of the two candidates, there are also some similarities. They are generally high-spend, despite a deficit estimated at 6.6% in 2024 and a debt-to-GDP ratio of close to 100%. Protectionism, particularly vis-à-vis China, is another common denominator.
On the other hand, there are many key differences beneath the surface.
Outlining her economic programme in a document of close to 80 pages entitled “A New Way Forward for the Middle Class”, the Democratic candidate has unveiled a programme that focuses steadfastly on working- and middle-class households, and on small businesses. Her programme offers help for the less well off with essentials such as food, health care and housing, alongside a favourable environment for innovative sectors – notably electric cars, semi-conductors and artificial intelligence.
Trump’s economic programme – distilled in a more general, summary document entitled “Make America Great Again” – seems to favour certain sectors: military industrial complexes, support for cheap fossil fuel energy in keeping with his “Drill, baby, drill” mantra, and a 180° turnaround on cars towards thermal vehicles. Trump also seems to be generally in favour of deregulation, and particularly for cryptocurrencies.
US bank Goldman Sachs has developed equity indices reflecting the stocks to focus on in the event of a victory by each of the two parties, and performance clearly backs up trends in the polls – over a month, since the debate between the two candidates, the Democratic basket of shares has fallen by around 5% whilst the Republican basket has risen by over 5%. Tune in on 5 November to find out the name of the winner.
Final version of 11 October 2024 – Clément Inbona, Fund Manager, LFDE