The Economy and the Election
By Isaac Cohen*
Whoever wins the US election will receive an economy in its seventh year of moderate but consistent expansion, counted since the end of the Great Recession. Last quarter’s performance was vigorous, at 2.9 percent of economic growth, by contrast with the one percent average of this year’s first semester. For the year as whole, the projection is that the US economy will grow at around 2.5 percent. Also, job creation has continued, with 161,000 new non agricultural jobs created in October and the unemployment rate decreasing to 4.9 percent, from 5 percent in September.
The most anticipated and significant monetary policy measure, before the inauguration of the new administration, is the expected increase in the federal funds interest rate, almost announced at the conclusion of the last central bank’s Open Market Committee meeting, on November 3. In the terms of the statement issued after the meeting, “the Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives.”
However, the markets displayed some anxiety in the week before the election. For instance, the Standard & Poor’s 500 Stock Index ended last week with the longest losing streak of 3.1 percent in nine consecutive days, not seen since 1980. While gold gained 3 percent in nine days and oil slid 11 percent in six days.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.