Christophe Barraudfrom Market Securities Monaco, described by Bloomberg as the economist who has best predicted the vicissitudes of the US economy in the last 11 years, now dares to take part in the elections. He points out in an interview he did in ‘Business Insider’ that has gone viral that The markets are currently undecided due to the elections. Climate disasters or labor strikes have left decisions related to capital expenditures on standby. But after the elections, regardless of who wins, the expert believes that the economy will experience growth, but with important nuances.
Overall, he says growth will be higher than consensus forecasts. This means that the expected rate for 2024, instead of 2.6%, would be 2.7%, and that of 2025 would be 2.1% compared to the 1.8% expected.
For his forecasts, Barraud himself has explained on his website that he is based on the momentum in polls, financial markets and betting markets larger ones like RealClear Politics (RCP), which aggregates quotes from various sites (BetOnline, Betfair, Betsson, Bovada, Bwin, Points Bet, Polymarket and Smarket). On average these indicate that Donald Trump has a 63.9% chance of winning the election.
Three scenarios, but one is the favorite
Consider that in a scenario in which Kamala Harris would win It would not be likely that there would be major changes economically. But instead, in a second scenario in which victory fell to trumpbut with a divided Congressin that case the repercussions would be serious.
If this result occurs, Barraud establishes that this will limit Trump’s ability to cut taxes to companies and households. “So probably will focus its efforts on foreign policywhich means that everything related to trade restrictions and tariffs could be implemented sooner than expected,” he points out. In the long term, if countries retaliate, it could slow the US economy. Damaging global growth in the process.
The third scenario that for Barraud is the most probable is a Trump victory with an overwhelming Republican majority and a red wave over the American map. This would give Trump a free pass to the White House, while the Republicans regain the Senate, with a tie for the House of Representatives. In this option, Trump could carry out tax cuts on corporations and households. “This could make concentrate more on domestic policy than foreign policy. Which in the short term, would have a positive impact on US economic growth, creating a GDP boost in 2025 of between 2.1% and 2.3%,” indicates Barraud.
However, what really worries Barraud’s clients is the trajectory of the growing US deficit in a period of 10 years. «If Trump wins, he expects an initial jump in the 10-year yield to at least 4.5%. “If there is a sweeping victory for the Republicans, then it would be followed by a gradual movement to 5% as investors look for a higher risk premium,” says the expert. This would especially be the case if it cuts immigration in a healthy labor market, generating higher inflation. If Harris wins, yields could fall even more, he said.
Voices against and uncertainty
Barraud’s predictions are different from those of the university professor Allan Lichtmannicknamed the “Electoral Nostradamus” who says that it will be Harris who wins this year’s elections. Lichtman has a track record of getting every winner right since 1984, except when he predicted Democratic Vice President Al Gore’s victory over George W. Bush.
For this it is based on «13 keys to the White House», based on historical and economic factors, the charisma of the candidates or social unrest, among others. He points out that the Democratic Party candidate has an advantage in eight of the 13 keys, while Trump only has three in his favor.
Most polls indicate a very close race, this means that uncertainty reigns, November 5th the die will be cast and we will see who really retains the title as the best predictor.
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