After the election of Joe Biden as the 46th President of the USA, relief can be felt in many places worldwide. International trading partners in particular are hoping for a return to reliability, partnership, objectivity and new confidence in transatlantic alliances. The election of Joe Biden will also have a positive impact on domestic politics, once the turbulence up to his inauguration has been resolved and the new government can devote all its energies to the tasks ahead.
Following the global economic slump in March 2020 caused by the Covid-19 pandemic, companies listed on the S&P 500 market index have almost returned to pre-corona levels. After the initial shock, the US economy and consumers have quickly adjusted to the new situation. The slump of 9% of GDP in March was offset by an increase of 7.4% in the third quarter of 2020 (1). Trillion-dollar tax cuts for companies and Corona aid packages under Trump until September 2020 led to an economic boom.
With a further $2 trillion economic stimulus package, the Biden government intends to continue this upward trend. This enormous sum represents just under 10% of the GDP estimated at approx. US$ 21 trillion for 2020 (2) and should therefore provide sufficient potential for a further upswing in the economy. Priority investments will be made in health care, infrastructure, education and environmental and climate protection, so that a large number of new jobs can be expected in these areas. Even if, as described by Morgan Stanley analysts (3), this should be counter-financed by an increase in corporate tax, among other things, companies will benefit in the long term from rising consumer spending due to falling unemployment figures.
More moderate tones and bilateral solutions can also be expected in the trade disputes with the EU and China. The new Asia-Pacific Free Trade Agreement “RCEP” should be reason enough to resolve existing disputes with trading partners or to rejoin the existing agreements in order to avoid isolating the USA.
If the domestic political turmoil eases after Joe Biden’s inauguration in January 2021, a return to objective and constructive work in Congress can be expected so as not to interrupt the “v”-shaped recovery of the US economy thanks to the aid packages that have been put in place so far. The need to fight the Covid-19 pandemic to protect every individual and the nation is also likely to have permeated all social classes and political camps by now. For all parties have one thing in common: “we are the United States of America. And there’s nothing we can’t do, if we do it together (4)“.