How Will the Election Impact American Businesses and Investors?
Economic Uncertainty for Businesses
This year’s election season has been unique in every sense of the word. Raising both extreme excitement and major concern among voters at the same time, it has been arguably the most controversial and highly covered election season in American history. A record-breaking 84 million viewers tuned in September 26 to watch the first presidential debate. While it’s been easy to get caught up in all the scandal and crossfire, businesses and their investors have a responsibility on their hands to put emotions aside when considering economic uncertainty and evaluate some serious potential outcomes. The next individual to occupy the oval office is guaranteed to have an effect on the thing that matters most to U.S. businesses: our economy.
It shouldn’t be “news” to anyone that economic uncertainty increases during an election year. When candidates bring up economic issues, people listen. Both Hillary Clinton and Donald Trump are promising an increase in available jobs and a growing, more stable economy, but it has yet to be determined whose plan will actually make that happen. Over the course of the next few months, both candidates will spend a majority of their time trying to convince America’s business owners and investors that their plan is the better of the two.
Since the last economic crisis took place nearly eight years ago, America has had a hard time trying to dig itself out of a deep financial hole. While we are making progress, we’re still not quite where we need to be, which means plans for the economy will steer the decisions voters this November. Businesses are still faced with economic uncertainty and questions about the effects that this election will have on their growth. In a survey conducted by the National Association for Business Economics in July, less than half of respondents expected sales to increase in the third quarter of this year. The same report showed that the median forecast for growth in real business fixed investment for 2016 is a 0.9% decline, a downward turn from the stable activity projected in June and the 2.1% actual gain in 2015. None of this is good news for American business owners. The disappointing yet very real numbers surely play into the fact that only 29% of interviewees in the Spring 2016 Bank of America Small Business Owner Report feel confident that the economy will improve over the next year. This signifies a sharp loss of hope compared to the Spring 2015 report.
History has shown that markets will respond irrationally to the fear of the unknown, proving that in the business world, what we don’t know can hurt us. Any sudden or abrupt tightens in financial market conditions caused by the unpredictable nature of major investments could lead us to another recession. Over the past year, economic growth and the amount of new jobs reported have been less than experts expected. Business owners and investors are taking more time to look into the financial health of other businesses and carefully selecting which ones are safe to work with. While both candidates are promising more jobs and investments in the economy, their self-destructive campaigns have left voters tempted to stray away from their parties, looking for alternatives. The lack of loyalty to blue or red based on this year’s choices is adding even more fuel to the fire of economic uncertainty.
Getting back to our choices, we’ve got Clinton or Trump. Both have proposed ideas that could reshape and rebuild our economic environment. Given the incumbent president is a democrat, it’s likely that a Clinton victory will have less dramatic or less immediate effects on economic policy than with Trump. If the republican nominee takes over, changes in foreign policy may enclose American trade, thus causing fluctuations in the value of the U.S. dollar. Trump has promised, on numerous occasions, to reduce inflation and decrease the tax rate from 35%, which is currently the highest among all developed nations, to 15%. Trump firmly believes that doing so will reduce anti-growth regulations and cut the overall national debt.
On the other side of the on-going debate, Hillary Clinton has promised to address the challenges we’ve continued to face since the Great Recession, including helping working Americans, focusing on long-term rather than short-term investments, and updating workplace policies in order to support modern families. Her plan includes a major push to increases taxes for the wealthy and invest in different clean energy and infrastructure projects. She firmly believes that her plan will strengthen trade enforcement, increase profit sharing for employees of large corporations, and create higher paying jobs for the middle class.
While it’s still too early to know whose plan will bring the most success to American businesses, the one thing we can be certain of is that change is in the air. When deciding who will earn your vote this November, consider which candidate will make the greatest impact on our country’s growth. Our economy depends on our decisions.