Whoever wins the White House in November will be confronted with a changing US economy. While the US has remained remarkably resilient despite rising interest rates and global uncertainty, it has become more prone to inflation volatility, given a larger exposure to frequent supply shocks and structural labor shortages. Against this backdrop, demand-boosting policies (such as tax cuts) or supply-hurting policies (tariff hikes) could re-ignite inflation faster and push up interest rates. Social tensions and fiscal trade-offs also raise concerns about the future of fiscal policy. On the other hand, the roll-out of artificial intelligence (AI) is likely to boost productivity and GDP growth, and the US’s energy net-exporter status provide additional room to maneuver.
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