U.S. Election 2024: Red Tide
The U.S. election results will shift the economic landscape, particularly if the Republicans also manage to hold onto the House. However, there are still plenty of questions around the extent to which the campaign rhetoric translates into policy reality. The lean will certainly be to more tax relief, although the positive growth impact will be countered somewhat by broad trade tariffs and uncertainty, accompanied by a firmer U.S. dollar and higher bond yields. The latter are driven by bigger budget deficits, modestly higher inflation risks, and possibly less Fed easing than previously expected. On balance, this puts some upside risk for our 2% growth call for 2025, but tax relief will take time and so the major impact on growth may be more of a 2026 story. For the Fed, rates are still on track to fall 25 bps this week, and likely by 25 bps again in December, but we look for a slower pace of rate reductions in 2025, with the terminal rate now likely 3.25%-to-3.50% (50 bps higher than previous).
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Douglas Porter
Chief Economist and Managing Director
Douglas Porter has over 30 years of experience analyzing global economies and financial markets. As Chief Economist at BMO Financial Group and author of the popular…(..)
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Michael Gregory, CFA
Deputy Chief Economist & Managing Director
Michael is part of the team responsible for forecasting and analyzing the North American economy and financial markets. He has spent his career working in either ec…(..)
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Scott Anderson, Ph.D.
Chief U.S. Economist and Managing Director
Scott Anderson is BMO’s Chief U.S. Economist and Managing Director. He analyzes and forecasts U.S. national and regional economic trends, and regularly author…(..)
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Sal Guatieri
Senior Economist and Director
Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with two decades experience as a macro economist. With BMO Financial Group since 1994, his m…(..)
View Full Profile >The U.S. election results will shift the economic landscape, particularly if the Republicans also manage to hold onto the House. However, there are still plenty of questions around the extent to which the campaign rhetoric translates into policy reality. The lean will certainly be to more tax relief, although the positive growth impact will be countered somewhat by broad trade tariffs and uncertainty, accompanied by a firmer U.S. dollar and higher bond yields. The latter are driven by bigger budget deficits, modestly higher inflation risks, and possibly less Fed easing than previously expected. On balance, this puts some upside risk for our 2% growth call for 2025, but tax relief will take time and so the major impact on growth may be more of a 2026 story. For the Fed, rates are still on track to fall 25 bps this week, and likely by 25 bps again in December, but we look for a slower pace of rate reductions in 2025, with the terminal rate now likely 3.25%-to-3.50% (50 bps higher than previous).
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