Businesses and consumers are hesitant to "spend money", there is reason to temporarily put aside worries

Consumers and businesses have been delaying purchases and investments for months, partly because of the 2024 US presidential election, according to surveys and comments from business executives.

Presidential candidates Kamala Harris and Donald Trump are very close in support. (Source: The Bulletin Time)

US Vice President Kamala Harris and former President Donald Trump both put forward economic agendas aimed at improving consumer spending and strengthening the economy, but each took a completely different approach.

This leads to different impacts related to taxes and inflation.

However, according to CNN , at this time, businesses cannot immediately understand the direction of US economic policy.

The obvious information that businesses can access is: The latest interest rate decision of the US Federal Reserve (Fed), scheduled to be announced on November 7.

The Fed lowered borrowing costs in September 2024 — for the first time in more than four years — while signaling further rate cuts.

The choice between two different economic realities

Experts predict that the outcome of the US election will shape the direction of the economy in the coming years, so it is wise to postpone important decisions such as expanding a business or buying a home until after the election.

Mr Trump's economic vision calls for drastic changes, such as widespread deportations of immigrants and widespread high taxes.

Meanwhile, Ms. Harris's agenda proposes more cautious solutions, such as a tax deduction of up to $50,000 for new small businesses, in an effort to win support from the American middle class.

While the ultimate goal of both candidates is to provide the American people and businesses with some economic relief.

A survey of economists by The Wall Street Journal found that 68% of respondents believe that commodity prices would rise faster under Mr. Trump’s plan than under Ms. Harris’s.

Tariffs were a key part of former President Trump’s economic plan and threatened to raise costs for businesses. Higher tariffs would likely hit U.S.-based importers, not foreign countries, as Trump claimed. That would ultimately lead to faster consumer inflation.

A recent quarterly survey of CFOs across multiple industries conducted by Duke University (North Carolina, USA) found that nearly one-third of respondents said they had "postponed", "downsized", "indefinitely postponed" or "permanently canceled" short- and long-term investment plans this year due to uncertainty about the election outcome.

Consumers are hesitant to make any major purchasing decisions, such as buying a home.

Election uncertainty may be the reason for sluggish sales of existing homes in recent months, said Lawrence Yun, chief economist for the National Association of Realtors.

“Maybe people are just waiting to see what the election results will be before making important decisions, like buying or selling a home,” he said.

Will the Fed cut interest rates?

Not only the US election, the world is also closely watching to see whether interest rates in the world's largest economy will decrease or not.

Previously, on November 1, the latest employment figures released by the US government showed that, excluding the temporary effects of recent strikes and natural disasters, the job market was cooling down in an orderly manner, not declining suddenly.

In recent speeches, Fed officials have pledged to keep the labor market strong and argued that current interest rates are still so high that they are holding back economic growth.

So, despite better-than-expected September 2024 employment figures, the market overall shows no signs of heating up again.

So, there is a good chance that the Fed will cut interest rates this week. Investors are almost certain that the bank will cut interest rates by 0.25 percentage points.

Lower interest rates could lure hesitant homebuyers back into the market, while for businesses, lower rates could allow them to move forward with plans built on low-interest-rate expectations.

So this week, most of the worries of the American people, businesses and the world will begin to be lifted.

Source: https://baoquocte.vn/bau-cu-my-2024-doanh-nghiep-nguoi-tieu-dung-ngan-ngai-xuong-tien-co-ly-do-de-tam-gac-au-lo-292530.html