S&P Global — 13 November 2024
Daily Update: November 13, 2024
The Implications of Trump’s Return for the US Economy
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
While political rhetoric delivered in the heat of a presidential campaign is at best an imperfect indicator of future policy, the return of Donald Trump to the Oval Office will have broad implications for the US economy. The former and future president made a series of policy proposals during his campaign, including broad tariffs, immigration controls, lower corporate taxes, challenges to the US Federal Reserve’s independence and incentives for fossil fuel use. Each of these, if taken at face value, would have substantial implications for the US’ economy, creditworthiness and consumer goods prices.
Republicans have proposed reducing the corporate tax rate to 15% from 21% for companies that manufacture goods in the US. According to S&P Global Ratings’ US chief economist Satyam Panday, such a cut is unlikely to improve the economy’s long-term potential. While companies might invest in new facilities and products, money gained through lower corporate taxes is usually used to boost dividends and for stock buybacks.
Higher tariffs were a centerpiece of Trump’s reelection campaign. If these tariffs were imposed through legislative or executive action, they would be inflationary. Since higher US tariffs will almost certainly inspire retaliatory tariffs, actual inflation and GDP impact could be much higher. Tariffs would likely have a net-negative effect on a range of sectors, including building materials, consumer products, retail and restaurants, and midstream energy.
Immigration policy will almost certainly change under a new Trump administration. Assuming that the government is successful in restricting immigration through increased border controls and/or mass deportations, employers that rely on less-skilled labor, particularly in the homebuilding, hotel, gaming and leisure sectors, would be affected.
Tariffs, lower taxes and immigration restrictions all have inflationary implications. Assuming they are not offset by fiscal policies, the Fed would likely raise rates to keep inflation expectations anchored, thus cooling the economy. Such a policy is unlikely to be popular with a Trump administration, which has already suggested reducing or eliminating the Fed’s independence. Such a move could have implications for US Treasurys and investor sentiment.
According to S&P Global Ratings, credit issues to watch under the new Trump administration include the impact of tariffs and taxes on nonfinancial corporates, changes to the supervision of financial corporates, pressure to grant tax-exempt status to municipal bonds, upheaval in health insurance markets, and changes affecting structured products related to commercial and consumer credit.
Today is Wednesday, November 13, 2024, and here is today’s essential intelligence.
How Climate Risks Are Shaping The Landscape For Asia-Pacific Financial Institutions
The global climate crisis is accelerating, and countries in Asia-Pacific face severe impacts. Asia and the Pacific remained the region most impacted by natural disasters in 2023, according to the State of the Climate in Asia 2023 report published by the World Meteorological Organization. Floods and storms cost lives and imposed economic damages and the region faced a rising number of increasingly severe heatwaves.
—Read the article from S&P Global Sustainable1
US Elections 2024: How Could A Second Trump Term Affect US Credit?
Former President Donald Trump’s successful bid to return to the White House for a second term, and the potential for an accompanying “red wave” — with Republicans having regained a majority in the Senate and on the verge of keeping control of the House of Representatives — represents a historic win.
—Read the article from S&P Global Ratings
Private Equity And Venture Capital Deal Value Rose In October
Global private equity and venture capital transaction value rose 65.8% to $63.28 billion in October, compared to $38.16 billion in the same period in 2023, according to S&P Global Market Intelligence data. The number of deals fell by approximately 5.8% year over year to 1,042 from 1,106.
—Read the article from S&P Global Market Intelligence
Trump's Win To Bring Spotlight On US Agricultural Trade, Sustainability
The outcome of the US presidential election is seen as decisive for the country's agriculture, with the new president Donald Trump assuming office amid low commodity prices and falling farm incomes. The Platts assessments from S&P Global Commodity Insights for US corn and soybean show October prices recovering on the month, but still significantly below last year.
—Read the article from S&P Global Commodity Insights
Listen: Price, Not The President: OPEC+ Policy As Trump Returns
The election of Donald Trump for a second term as US president has brought significant attention to US energy policy. Meanwhile, OPEC+ announced on November 3 its decision to delay tapering production cuts of 2.2 million b/d from December to January, having previously postponed from October 2024. As markets absorb president-elect Trump's victory, Payam Hashempour and Charlie Mitchell join Joel Hanley to analyze OPEC+ policy amid and beyond this political shake-up affecting the cartel's major producer counterpart across the Atlantic.
—Read the article from S&P Global Commodity Insights
Big Tech Ramps Up Capex As 1st Signs Of AI Returns Emerge
Big Tech companies significantly boosted their capital expenditures in the third quarter, reflecting a strategic focus on expanding AI infrastructure. Amazon.com Inc. led its peers in capital expenditures growth with a 44% year over year increase to $22 billion. It was followed by Alphabet Inc., which reported capex growth of 35%; Microsoft Corp. with 34%; and Meta Platforms Inc. at 21%. All told, capex from the four companies totaled $58.86 billion in the third quarter, up from $36.95 billion a year earlier.
—Read the article from S&P Global Market Intelligence
Webinar: Climate Science Through The Eye Of Hurricane Helene (Nov. 21, 2024)
As extreme weather events become increasingly frequent and severe, the need for effective disaster resilience strategies has never been more urgent. In this upcoming webcast, we’ll hear perspectives from weather, climate science, and disaster response experts who live and work in the areas hardest hit by Hurricane Helene. Join us as we explore how to leverage climate data, improve modeling of compound and cascading events, and understand the short- and long-term impacts of climate change as we face back-to-back disasters around the globe.
—Register for the webinar from S&P Global Sustainable1