A recent Goldman Sachs report revealed that Democratic nominee and current US Vice President Kamala Harris would be better for the US economy if she triumphs over former President Donald Trump to win the upcoming November elections. The investment bank's analysis revealed that Harris's win could mean 30,000 more jobs monthly than a Republican win.
Moreover, Goldman Sachs indicated that Harris's economic agenda to support the middle class and small businesses would boost consumer spending and support the overall US economy. She plans to reduce elevated living costs by banning price-gouging on groceries, offering $6,000 in tax credits to families with newborns, and providing $25,000 downpayment assistance for first-time homebuyers. The investment bank believes these measures would offset any negative effects of higher taxes on large corporations and high-net-worth individuals.
"A Harris presidency could benefit small and medium businesses as the focus would appear to be on fiscal policies that provide support through tax incentives and grants for startups," according to eToro market analyst Javier Molina. Harris is also "expected to lead to higher job creation when compared to Trump, especially if accompanied by fiscal stimulus and expanded tax credits. This could lead to moderate job growth, boosting sectors like renewable energy and infrastructure," Molina added.
Goldman Sachs Thinks Trump's Plans Could Reheat Inflation
The Wall Street giant explained that Trump's reelection would lift inflation and impact economic output next year, given his plans to enforce stringent immigration policies and higher import tariffs. "We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse," according to the report. While immigrants are crucial in bolstering the US labour market and spending, limiting immigration in Trump's style would eliminate these growth drivers and affect the nation's bottom line.
If Trump wins, he plans to lower living costs in the first 100 days in Office. He also proposed removing taxes on Social Security payments and worker tips. However, hiking tariffs on all imported goods by 10% and 60% on those from China, including imports like electric cars, would drive core inflation higher. Higher tariffs are likely to increase living costs since producers often pass these overheads to the end-users, meaning that a 10% tax hike on importers could translate to a 10% jump in the price Americans pay for buying imported goods.
Goldman Sachs CEO Says Harris Blew The Report Out Of Proportion During Her Debate With Trump
Goldman Sachs CEO David Solomon believes Harris and Trump should prioritise small businesses in their respective economic agendas. However, Solomon highlighted during a CNBC interview that Harris blew the report out of proportion during her recent debate with Trump.
"I am offering what I describe as an opportunity economy, and the best economists in our country, if not the world, have reviewed our relative plans for the future of America," Harris said during the debate. "What Goldman Sachs has said is that Donald Trump's plan would make the economy worse, mine would strengthen the economy."
Solomon said Harris left out key report details, such as the difference in the economic impact between the rival policies was "about two-tenths of 1%." He pointed out that the report was created by "an independent analyst" who considered a handful of policy issues from both nominees to price in their impact on the US GDP growth trajectory. "I think this blew up into something that's bigger than what it was intended to be," he added.
