Topline
A victory for Joe Biden over Donald Trump and a Democratic sweep—where Republicans lose the Senate—would result in the biggest rebound in economic growth and employment, according to a recent analysis of both candidates’ economic proposals by Moody’s Analytics.
7.4 million more jobs would be added under Biden than Trump, Moody’s estimates.
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Key Facts
Moody’s analyzed four potential outcomes for the November presidential election: A total Democratic sweep; a total Republican sweep; Democrats winning the presidency and the House but not the Senate; and status quo with Trump in the White House, Democrats controlling the House and Republicans holding the Senate.
Based on the economic proposals of both President Trump and Biden, “the economic outlook is strongest under the scenario in which Biden and the Democrats sweep Congress and fully adopt their economic agenda,” said Moody’s Analytics chief economist Mark Zandi.
A Blue Wave—in which Democrats control both chambers of Congress and the White House—would result in the highest number of jobs added and the best rebound in economic growth, Moody’s found.
In that scenario, Biden would be allowed to enact more wide-sweeping economic policy changes such as spending trillions on infrastructure, education and social safety, while also boosting trade and immigration.
“Greater government spending adds directly to [GDP] and jobs,” Zandi said, while also arguing that the higher taxes Biden has proposed to fund some of these plans have an “indirect impact” and would not slow the economy.
Moody’s analysis found that a Trump victory would be a worse outcome for the economy because of his smaller proposals for fiscal stimulus and the increased likelihood of deeper trade tensions and cuts to immigration.
Trump has proposed “much less expansive support to the economy from tax and spending policies,” Moody’s said, adding that his planned immigration cuts are a “significant impediment to longer-term economic growth” as it slows both the job market growth and labor productivity.
“Even allowing for some variability in the accuracy of the economic modeling and underlying assumptions that drive our analysis, we conclude that Biden’s economic proposals would result in a stronger U.S. economy than Trump’s,” Moody’s concluded.
That’s how many more jobs would be added to the economy under Biden than Trump, Moody’s report found. “Largely because of Biden’s substantially more expansive fiscal policies, the economy would return to full employment more quickly coming out of the pandemic than under Trump—in the second half of 2022 under Biden, compared with the first half of 2024 under Trump.”
While recent economic data has signaled the start of a recovery from the coronavirus recession, prospects for a quick rebound are quickly dwindling. Many experts have warned that it could take years for the U.S. economy to fully recover from the impact of the pandemic. While the stock market hit record highs in August, it’s so far had a dismal September including four straight weeks of losses. Ongoing uncertainty over the next round of fiscal stimulus from Congress and an alarming rise in new coronavirus cases in Europe and the U.S. have both threatened to derail the economic recovery. The job market is also still struggling, with the unemployment rate currently at 8.4%, according to the Bureau of Labor Statistics. Another 870,000 Americans filed unemployment claims last week, while the number of continuing jobless claims is still well over 12 million—much higher than levels seen in previous recessions.
Federal Reserve Chairman Jerome Powell told Congress on Wednesday that further fiscal stimulus would be crucial if the U.S. economic recovery is to continue, saying that there’s still “a long way to go.” Lawmakers on both sides of the aisle have been stuck in a stalemate, struggling to agree on the size and provisions of the next coronavirus stimulus bill. House Speaker Nancy Pelosi said on Thursday, however, that Democrats are preparing a new, smaller relief package worth around $2.4 trillion—but Republicans have advocated for a bill costing no more than $1.5 trillion. If Republicans turn down Democrats’ latest offer, the House could vote on the new proposal next week even without GOP support.
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