US Election: choppy economic waters ahead

by Jack Coyler and Alahna Kindred

She promises the status quo, he promises the very opposite, experts promise both will end in tears.

In its most basic iteration Hillary Clinton and Donald Trump’s economic policy offer a choice between bleak and bleaker.

When it comes to Donald Trump, the both short-term and long-term economic implications are not favourable.

“US financial markets are often spooked by events that promote change from the status quo,” Dr Paul Vasquez, political science lecturer at the University of Central Florida said. “Trump’s election could prompt a short-term decline in the US financial markets”.

News Editor of the Institute of Economic Affairs Kate Andrews agrees.

“With Trump we will see more fluctuation in the markets because everyone is uncertain about what he is going to do and what he will get away with,” Andrews said.

There are serious concerns regarding Trump’s radical departure from mainstream policy to his isolationist stance.

Trump’s tax cuts for the wealthy would most likely stir fears that there wouldn’t be enough money to crowd out private investment, Dr Vasquez said.

Currently, Trump’s platforms would damage trade relations with China.

“These are long-term concerns regarding protectionist measures that could spark a trade war,” Dr Vasquez said.

However, Andrews is confident that Trump wouldn’t be successful because of the long, bureaucratic process of the US government.

“I think a lot of what Trump says is all talk,” Andrews said.

Associate fellow in the US and Americas Programme at Chatham House, Dr Bates Gill, asserts that stagnation was a strategic goal of the Republican party, resulting in a gridlock Congress during the Obama administration.

“What seems even more certain is that no matter who wins, the country will still face a great deal of divisiveness,” Dr Gill said. “This will make it difficult to get things done legislatively at home and to assert US leadership abroad”.

This isn’t anything new, but a continuation of problems from the second term of the Obama administration.

At a glance, the current markets do favour Hillary Clinton to win so long as she adopts and maintains the status quo. And if the Democrats win back the House and the Senate, effectively ending the gridlock.

However, Andrews emphasises that this stability can only last so long.

“The markets will stay fairly stable after the election because with Clinton we know what we are getting,” Andrews said. “However overtime there will be more instability.”

Andrews explains that one of the main factors that will contribute to economic instability during the Clinton administration will be her treatment of the Affordable Care Act, or Obamacare. Clinton’s current platform only seeks to expand Obamacare and not reform it, according to Clinton’s platforms.

“She doesn’t plan to reform it, and premiums are expected to rise next year,” Andrews said. “And Clinton proposes to raise taxes”.

Clinton’s tax increases comes in many forms from reforming the current tax code, infrastructure and her college plan, according to her platforms.

The issue Andrews sees with that is even though unemployment has gone down to 4.9 per cent, according to the United States Department of Labor, people are still struggling in this economy.

“Not as many people are looking for jobs as they used to and there hasn’t been an increase of wages,” Andrews said.

Minimum wage has not changed nationally since 2009, according to the US Department of Labor.

Voters will not be “Stronger Together” with Clinton, nor will Trump “Make America Great Again”.

“This is just two different kinds of ugly,” Andrews said.

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