Post-Election: Our Macro Outlook Is Unchanged

We have been asked multiple times recently if our macroeconomic forecast is going to change now that the November 2024 election is over. The answer is no. We will not be changing our macroeconomic outlook at this time.

We have been straightforward for many years that the winner of the White House, red or blue, does not trigger a forecast change for the US economy. We have researched the effects of elections on the economy multiple times throughout ITR’s history and have repeatedly found that the candidate elected to the presidency does not change the business cycle already underway. Essentially, the economy is too large for a singular person to change its course that quickly.

However, this November, we walked away from the election with the Republican Party gaining control of the presidency, the Senate, and the House. We had to ask ourselves if we could still confidently say that the president would not change the economic cycle given an alignment between the president, the Senate, and the House. After analyzing US history in its entirety, we found no conclusive evidence that any alignment of the president, Senate, and House (red or blue) drove greater or inferior economic results. Therefore, we are not changing our macroeconomic outlook at this time.

A few things to keep in mind about why the election does not dictate a change to the macroeconomy:

1. This is a process. Legislation will be passed, but change does not happen overnight. It is often one to two years after a piece of legislation is passed before we may see the macro impact.
2. The US economy is the largest singular economy in the world. Politics makes for greater headlines, but the business cycle supersedes politics.
3. Whether it was Harris or Trump elected (alphabetical order), we anticipated an ongoing rise in the national debt either way. Therefore, the election result has not caused us to change our longer-term outlooks into the 2030s.

We study policies, not politics. It is important to remember that while we have not changed our macroeconomic forecasts as the result of an election, we have changed microeconomic forecasts because of various economic policies and their anticipated economic impacts. However, when those situations arise, we wait until the legislation is passed, so we can provide you with a clearer view into the future instead of offering multiple scenario plans. There has already been much discussion about potential policies surrounding deportation, taxes, and trade disputes. On a macroeconomic level, we are watching the situation closely and will work on any necessary changes when the time comes.

On a business level, we are warning our clients of potential risks and opportunities so they can start to make more informed decisions or further assess their own scenario plans. The potential policy changes are more likely to have a faster effect at the micro level and we are working closely with our clients to monitor the situation. If you are unsure if you would be impacted or to what degree you would be impacted, we can help you test your business for susceptibility to potential policy changes.