Autumn may present a major challenge to the US economy. This year's presidential race promises to be particularly tight. Moreover, regardless of the outcome, it is likely to pose a real threat to the country's economic performance.
The latest projections from leading independent financial experts are rather disappointing. First of all, the overwhelming majority of analysts expect Donald Trump to lose the election. Also, they predict that the main US index - the S&P 500 - could plunge by 5-10 percent. Experts consider the tax reform of Democratic presidential candidate Joe Biden to be the main threat to the S&P 500. The former Vice President has proposed raising taxes on the wealthiest Americans with income above $400,000. In this situation, high-income US residents are likely to withdraw capital from the country, rather than investing it in local companies. Nevertheless, Trump's victory is no guarantee of the economic recovery as well. The index may react to this news with a short-term rally, but then it is still bound to lose ground.
Besides, the economic situation will depend on the outcome of the Senate election. The US Senate is a fully-fledged institution that has the right to vote for any initiative proposed by the top-tier government. Therefore, in case Biden wins, it will not be so easy for him to carry out this tax reform.
