Wall Street giant Goldman Sachs has predicted the potential economic implications of a Republican or Democratic victory in the November 5 presidential elections in the US. It claimed the country's GDP may face a hit if Donald Trump secures a second term in the White House, reported Reuters.
In a note on Tuesday, economists at the investment bank stated that the economic growth of the US would likely witness the biggest boost in the coming two years from a Democratic government, headed by Kamala Harris, Reuters reported.
The economic output would take a hit next year, majorly from the increased tariffs on imports as well as tighter immigration policies, if the Republican Party comes to power, even with a divided government led by the former US president, they said.
As per Goldman Sachs, there will be more job growth in the US under a Democrat government than the Republicans.
If Trump sweeps the polls or even manages to form a divided government, in that case, "the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, resulting in a peak hit to GDP growth of -0.5pp in 2025H2 that abates in 2026," it said.
If Democrats get another term then the new spending and expanded middle-income tax credits will slightly be more than the "offset lower investment due to higher corporate tax rates", the Wall Street behemoth believes.
This will result in a "very slight boost to GDP investment due to higher corporate tax rates." Ultimately, this will give a little boost to GDP growth on average over 2025-2026.
"If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-2026," the news agency quoted the note from the company.
If Harris wins, the job growth will be 10,000 a month higher compared with Trump's win with a divided government, and it will be 30,000 higher in comparison with a sweep by the Republicans, as per Goldman estimates.
The US' core inflation is likely to rise as a Trump win may lead to increased tariffs on auto imports from China, Mexico and the European Union, it added.