Harris' economic situation may pose some challenges to her approval rating, and the market is gradually examining the impact of her economic plans.
Frank Kelly, senior political strategist at investment firm DWS Group, pointed out that she seems to be more proactive than Biden on many issues directly related to consumers. For example, Harris recently announced that he will increase the corporate tax rate from 21% to 28%.
This plan is in stark contrast to Trump's promise of tax cuts. According to calculations by the non partisan organization responsible for the Federal Budget Committee, raising tax rates will help the United States reduce its budget deficit by $1 trillion over the next decade and stabilize its financial situation. But there are also concerns that increasing taxes will erode corporate profits.
Goldman Sachs stated that every one percentage point change in the US corporate tax rate will result in a corresponding change of less than one percentage point in the earnings of S&P 500 constituent stocks.
In addition to corporate taxes, Harris also mentioned in the economic agenda that food and grocery price fraud would be prohibited, and child tax credits would be introduced. These policies may have an impact on industry sectors.
Some analysts believe that Harris will be a more radical version of Biden, manifested in green policies, healthcare pricing, banning hydraulic fracturing, and increasing universal subsidies. Many people have pointed out that Harris' extravagant spending habits were already evident when he was vice president.
More generous candidates
The Congressional Budget Office predicts that during the 2021-2024 fiscal year, the current US government's spending will be $5.9 trillion higher than pre pandemic levels in 2019, and the deficit will reach $7.7 trillion. This excessive fiscal spending, together with the previous loose monetary policy of the Federal Reserve, has catalyzed the inflation nightmare in the United States.
However, in the eyes of some observers, Harris' willingness to spend is even greater than Biden's.
Firstly, Harris is a co-founder of Biden's Green New Deal, which was estimated to generate $52-93 trillion in fiscal spending over the next decade, and the US GDP in 2023 is only $27 trillion.
Secondly, during his brief tenure as a senator, Harris also attempted to push for a bill to increase the national basic income, which is reportedly the most generous proposal for a national basic income in the history of the US Congress.
These spending ambitions have raised concerns in the market that Harris' appointment may reignite the inflation situation in the United States. In addition, Harris' promise to ban hydraulic fracturing further suppresses energy production in the United States, triggering another rise in energy prices, which has made many analysts feel uneasy about her economic policies.
Peter Tuz, President of Chase Investment Counsel, stated that any measures such as tax increases that reduce corporate earnings would have a negative impact on the stock market. However, there are many variables before the proposal is implemented.
He emphasized that the current gap between the two parties in Congress is very narrow, and if there is a split in Congress or a Republican majority, even if Harris becomes president, the effectiveness of her economic proposals will be very limited.