Evelyn Reynolds

The U.S. presidential election result has ensured a sharp turn in economic policy expected to upend global commerce and diverge from decades of American norms.The U.S. presidential election is over. What remains is a disorienting miasma of fresh economic uncertainty.Despite reams of campaign proposals, just how President-elect Donald J. Trump’s administration will handle policy decisions that are crucial to the global economy’s path — on trade, technology, climate, industrial policy and more — is still unclear.Meanwhile, pre-election sources of instability keep spinning. War rumbles on in Ukraine. Escalating conflict in the Middle East could reignite a rise in food and energy prices. China, a vital engine of global growth, is trying to resuscitate its flattened economy. Many poor and middle-income countries face an unscalable wall of debt.Increasing bouts of extreme weather continue to destroy crops, wreck cities and swell the flow of migrants from economically devastated regions. And advances in artificial intelligence are poised to eliminate, create and reconfigure tens of millions of jobs.Then there is the hangover from the pandemic. Philip N. Jefferson, the vice chair of the Federal Reserve, has said policymakers are still trying to understand the economic aftereffects of this “once-in-a-century disturbance of worldwide consequence.”Inflation, in particular, has become harder to predict in the pandemic’s aftermath as political and military tensions have risen, he noted.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The Federal Reserve likely will stick to the business at hand when it wraps up its meeting Thursday with another interest rate cut.
Market attention probably will turn to what Chair Jerome Powell has to say about the future.
In keeping with policymakers’ historical desire to stay above the political fray, Powell likely will avoid direct commentary about what to expect from President-elect Donald Trump.

Federal Reserve Board Chairman Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., September 18, 2024. REUTERS/Tom Brenner
Tom Brenner | Reuters

The Federal Reserve likely will stick to the business at hand when it wraps up its meeting Thursday with another interest rate cut, but will have its eye on the future against a backdrop that suddenly has gotten a lot more complicated.
Financial markets are pricing in a near-certainty that the central bank’s Federal Open Market Committee will lower its benchmark borrowing cost by a quarter percentage point as it seeks to “recalibrate” policy for an economy that is seeing the inflation rate moderate and the labor market soften.

The focus, though, will turn to what’s ahead for Chair Jerome Powell and his Fed colleagues as they navigate a shifting economy — and the political earthquake of Donald Trump’s stunning victory in the presidential race.
“We think Powell will refuse to give any early judgment on the implications of the election for the economy and rates, and will seek to be a source of stability and calm,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a note issued before the election’s outcome was known.
In keeping with policymakers’ historical desire to stay above the political fray, Powell “will say the Fed will take the time it needs to study the new administration’s plans” then will “refine this assessment as actual policies are developed and enacted,” Guha added.
So while the immediate action will be to stay the course and enact the cut, which equals 25 basis points, the market’s attention likely will turn to what the committee and Powell have to say about the future. The fed funds rate, which sets what banks charge each other for overnight lending but often influences consumer debt as well, is currently targeted in a range between 4.75%-5.0%.
Market pricing currently favors another quarter-point cut in December, followed by a January pause then multiple reductions through 2025.

Preparing for Trump

But if Trump’s agenda — tax cuts, higher spending and aggressive tariffs — comes to fruition, it could have a meaningful impact on a Fed trying to right-size policy after the mammoth rate hikes aimed at controlling inflation. Many economists believe another round of isolationist economic moves by Trump could reignite inflation, which held below 3% during Trump’s entire first term despite a similar recipe.
Trump was a frequent critic of Powell and the Fed during his first term, which ran from 2017-21, and is in favor of low interest rates.
“Everyone is on the lookout for future rate cuts and whether anything is telegraphed,” said Quincy Krosby, chief global strategist at LPL Financial. “Also, however, there’s the question of whether or not they can declare victory on inflation.”
Any answers to those questions would be largely left to Powell’s post-meeting news conference.
Though the committee will release its joint decision on rates, it will not provide an update on its Summary of Economic Projections, a document issued quarterly that includes consensus updates on inflation, GDP growth and unemployment, as well as the anonymous “dot plot” of individual officials’ interest rate expectations.
Beyond the January pause, there’s considerable market uncertainty about where the Fed is heading. The SEP will be updated next in December.
“What we’re going to hear more and more of is the terminal rate,” Krosby said. “That’s going to come back into the lexicon if yields continue to climb higher, and it’s not completely associated with growth.”

So where’s the end?

Traders in the fed funds futures market are betting on an aggressive pace of cuts that by the close of 2025 would take the benchmark rate to a target range of 3.75%-4.0%, or a full percentage point below the current level following September’s half percentage point cut. The Secured Overnight Financing Rate for banks is a bit more cautious, indicating a short-term rate around 4.2% at the end of next year.
“A key question here is, what’s the end point of this rate cut cycle?” said Bill English, the Fed’s former head of monetary affairs and now a finance professor at the Yale School of Management. “Fairly soon, they’ve got to think about, where do we think this rate cut period changes with the economy looking pretty strong. They may want to take a pause fairly soon and see how things develop.”
Powell also may be called on to address the Fed’s current moves to reduce the bond holdings on its balance sheet.
Since commencing the effort in June 2022, the Fed has shaved nearly $2 trillion off its holdings in Treasurys and mortgage-backed securities. Fed officials have said that the balance sheet reduction can continue even while they cut rates, though Wall Street expectations are for the run-off to end as soon as early 2025.
“They’ve been happy to just kind of leave that percolating in the background and they probably continue to do that,” English said. “But there’s going to be a lot of interest over the next few meetings. At what point do they make a further adjustment to the pace of runoffs?” More

Many Americans fretted about inflation as they headed out to vote. But Donald J. Trump’s approach comes with risks of a renewed boost.Americans have been chafing against higher prices for years now, propelling unhappy voters to the polls and helping to deliver the White House to the Republican candidate, Donald J. Trump.But how Mr. Trump’s policies would help on costs is unclear. And in fact, many economists have warned that his proposals could instead make inflation worse.Inflation measures how much prices are rising over a given period, usually a year. It picked up sharply starting in 2022 and remained rapid in 2023. While prices are no longer climbing as quickly, those two years of rapid increase have left costs for many common purchases — from eggs to apartments and restaurant meals — notably more expensive than consumers remember them being as recently as 2019 or 2020.For months, that has weighed on consumer confidence and caused many voters to give the nation’s economic performance poor marks, even though the unemployment rate is very low and companies have been hiring.Voters regularly cited the economy as a top concern in polls headed into the election, and they often suggested that they thought Mr. Trump would do a better job in managing it. While the economic perception gap between Mr. Trump and Vice President Kamala Harris, the democratic candidate, closed somewhat over time, it never fully faded.While rapid inflation had been a global trend, Mr. Trump regularly pinned the blame for it on the Biden administration. And exit polls suggested that voters were indeed worried about the economy as they headed out to vote. Roughly three in four voters said that inflation had caused their families hardship over the past year.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

When the votes are counted in the U.S. presidential election, will it be the gender gap, the income gap, the Latino vote or the media and marketing campaigns that turned out to be decisive?
CNBC senior economics reporter Steve Liesman sat down with four polling experts for an in-depth look into the data to see which ones could turn the election to either Vice President Kamala Harris or former President Donald Trump. The panel included Steve Kornacki, NBC News national political correspondent; Mark Murray, NBC News senior political editor; Micah Roberts, Public Opinion Strategies partner and CNBC’s Republican pollster; and Jay Campbell, Hart Research partner and CNBC’s Democratic pollster.

The conclusion? Yes, it is likely to be the economy. But it is also other factors such as character and turnout, which candidate represents change, who generates enthusiasm and who the persuadable voters finally decide to support that will help determine the outcome.
See the full video above to hear the discussion.

Don’t miss these insights from CNBC PRO More

Despite their concerns, some farm operators still support the former president and prefer his overall economic plan.To former President Donald J. Trump, “tariff” is the most beautiful word in the dictionary.But to farmers in rural America, the blanket import duties that Mr. Trump wants to enact if elected are a nightmare that they would rather not live through again.As president, Mr. Trump imposed tariffs in 2018 and 2019 on $300 billion of Chinese imports, a punishment he wielded in order to get China to negotiate a trade deal with the United States. His action triggered a trade war between Washington and Beijing, with China slapping retaliatory tariffs on American products. It also shifted more of its soybean purchases to Brazil and Argentina, hurting U.S. soybean farmers who had long relied on the Chinese market.When Mr. Trump finally announced a limited trade deal in 2019, American farmers were frazzled and subsisting on subsidies that the Trump administration had handed out to keep them afloat.Now it could happen all over again.“The prospect of additional tariffs doesn’t sound good,” said Leslie Bowman, a corn and soybean farmer from Chambersburg, Pa. “The idea of tariffs is to protect U.S. industries, but for the agricultural industry, it’s going to hurt.”The support of farmers in swing states such as Pennsylvania could be pivotal in determining the outcome of Tuesday’s election. Mr. Trump remains popular in rural America, and voters such as Mr. Bowman say they are weighing a variety of factors as they consider whom to vote for.Mr. Trump has said that if he wins the election he will put tariffs as high as 50 percent on imports from around the world. Tariffs on Chinese imports could be even higher, and some foreign products would face levies upward of 200 percent. Economists have warned that such tariffs could reignite inflation, slow economic growth and harm the industries that Mr. Trump says he wants to help.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

America’s consumer price index, a key inflation gauge, was up 2.4% in September compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics.
On Friday, new data showed U.S. job creation in October slowed to its weakest pace since late 2020.
Markets largely ignored the bad news, as the nonfarm payrolls report flagged acute climate and labor disruptions.

A trader works as a screen displays the Fed rate announcement, on the floor of the New York Stock Exchange on June 12, 2024.
Brendan McDermid | Reuters

RIYADH, Saudi Arabia — Major Wall Street CEOs see ongoing inflation pressures in the U.S. economy and aren’t convinced that the Federal Reserve will continue its rate-easing path with a further two reductions this year.
The Fed cut its benchmark rate by 50 basis points in September, indicating a turning point in its management of the U.S. economy and in its outlook for inflation. In late-September reports, strategists at J.P. Morgan and Fitch Ratings had predicted two additional interest rate trims by the end of 2024 and expect such reductions to continue into 2025.

The CME Group’s FedWatch tool puts the probability of a 25-basis-point cut at this week’s November meeting at 98%. The current probability of the benchmark rate being taken down by another 25 basis points at the December meeting is 78%.
But some CEOs appear skeptical. Speaking last week at Saudi Arabia’s showcase economic conference, the Future Investment Initiative, they see more inflation on the horizon for the U.S., as the nation’s economic activity and both presidential candidates’ policies involve developments that will potentially be inflationary and stimulatory — such as public spending, the onshoring of manufacturing, and tariffs.

A group of CEOs speaking at an FII panel moderated by CNBC’s Sara Eisen — which included Wall Street hegemons such as the bosses of Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered and State Street — were asked to raise their hand if they thought two additional rate cuts would be implemented by the Fed this year.
No one put their hand up.
“I think inflation is stickier, honestly, you look at the kind of jobs report and the wage reports in the U.S., I think it’s going to be hard for inflation to come down to the 2% level,” Jenny Johnson, Franklin Templeton president and CEO, told CNBC in an interview on Wednesday, saying she thinks only one further interest rate cut will take place this year.

“Remember a year ago, we were all here talking about recession? Was there going to be [one]? Nobody’s talking about recession anymore,” she said.
Larry Fink, whose mammoth BlackRock fund oversees over $10 trillion in assets, also sees one rate reduction before the end of 2024.
“I think it’s fair to say we’re going to have at least a 25 [basis-point cut], but, that being said, I do believe we have greater embedded inflation in the world than we’ve ever seen,” Fink said at another FII panel last week.
“We have government and policy that is much more inflationary. Immigration — our policies of onshoring, all of this — no one is asking the question ‘at what cost.’ Historically we were, I would say, a more consumer-driven economy, the cheapest products were the best and the most progressive way of politicking,” he noted. 

America’s consumer price index, a key inflation gauge, was up 2.4% in September compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics. That figure is a tick down from the 2.5% print of August, implying a slowdown in price growth. The September reading was also the smallest annual one since February 2021.
On Friday, new data showed U.S. job creation in October slowed to its weakest pace since late 2020. Markets largely ignored the bad news, as the nonfarm payrolls report flagged acute climate and labor disruptions.
Goldman Sachs CEO David Solomon said inflation will more embedded into the global economy than what market participants are currently predicting, meaning price rises could prove to be stickier than the consensus.
“That doesn’t mean that it’s going to rear its head in a particularly ugly way, but I do think there’s the potential, depending on policy actions that are taken, that it can be more of a headwind than the current market consensus,” he said.
Morgan Stanley CEO Ted Pick went even further, declaring last Tuesday that the days of easy money and zero-interest rates are firmly in the past.
“The end of financial repression, of zero interest rates and zero inflation, that era is over. Interest rates will be higher, will be challenged around the world. And the end of ‘the end of history’ — geopolitics are back and will be part of the challenge for decades to come,” Pick said, referencing the famous 1992 Francis Fukuyama book, “The End of History and the Last Man,” which argued that conflicts between nations and ideologies were a thing of the past with the ending of the Cold War.

Speaking on Sara Eisen’s panel Tuesday, Apollo Global CEO Marc Rowan even questioned why the Fed was cutting rates at a time when so much fiscal stimulus had propped up a healthy-looking U.S. economy. He noted the U.S. Inflation Reduction Act and the CHIPS and Science Act and an increase in defense production.
“We’re all talking about, in the U.S., of shades of good. We really are talking about shades of good. And to come back to your point on rates, we massively increased rates, and yet, [the] stock market [is] at a record high, no unemployment, capital market issuance at will, and we’re stimulating the economy?,” he said.
“I’m trying to remember why we’re cutting rates, other than to try and equalize the bottom quartile,” he later added. More

Voters walk to cast their ballots during early voting in the presidential election at a polling station at the C. Blythe Andrews, Jr. Public Library in Tampa, Florida, U.S., November 1, 2024. 
Octavio Jones | Reuters

Executives at America’s largest companies are talking publicly with investors about the presidential election more so than in recent cycles.
The word “election” came up on 100 earnings calls of S&P 500-listed firms between Sept. 15 and Oct. 31, according to FactSet. That’s the highest number of companies in the broad index mentioning the word during that timeframe, according to CNBC screens of the same period going back to 2004. The U.S. presidential election is Tuesday Nov. 5.

The economy is on the minds of everyday Americans as they head to the polls for what’s shaping up to be a neck-and-neck race between Kamala Harris and Donald Trump. At the same time, white-collar leaders are considering potential policy impacts on their businesses, while lamenting a general uncertainty tied to the political season.
“Because of election uncertainty and a variety of other things, you can feel a little bit of caution out there,” Dover CEO Richard Tobin told analysts on the specialty manufacturer’s earnings call in late October.

FactSet senior earnings analyst John Butters first pointed out the volume of companies discussing elections in recent weeks. Notably, his data found that very few executives of S&P 500 companies mentioned Harris or Trump by name, talking about the race more broadly.

‘Prudent’ clients

Multiple companies cited a feeling of unpredictability tied to the presidential race among consumers and business clients.
At Tractor Supply, CEO Harry Lawton said its customer was expected to remain “prudent” like past election years. That comes after the farm-focused retailer reported a bump in emergency response sales to start the quarter following Hurricanes Helene and Milton.

Southwest Airlines, meanwhile, expects a “trough” in air travel around Election Day, according to operations chief Andrew Watterson. But when it comes to booking trends, Royal Caribbean CEO Michael Bayley said there has historically been no long-term impact from presidential elections, though the cruise line may see some volatility the week of the contest.

Southwest Airlines airplanes are serviced at their gates at Fort Lauderdale-Hollywood International Airport on May 18, 2024, in Fort Lauderdale, Florida.
Gary Hershorn | Corbis News | Getty Images

In addition to Election Day, market participants and business leaders are also closely monitoring the Federal Reserve’s monetary policy meeting next week. Tool maker Stanley Black & Decker CEO Donald Allan listed both the election and interest rates as reasons to anticipate “choppy markets” into the first half of 2025.
Fed funds futures are pricing in a roughly 96% chance of a decrease to the borrowing cost at the November meeting, according to the CME Group’s FedWatch tool as of Friday evening. That comes after the central bank in September issued its first rate cut since 2020.
Stanley Black & Decker’s Allan also pointed out Trump’s policy on taxing imports, noting that America would be “likely in a new tariff regime.” The Republican nominee has said he plans to impose a 20% tax on imports, with an extra high rate of 60% on those coming from China.
William Grogan, CFO of water infrastructure company Xylem, said the election is one factor creating a “little bit of a pause” in the industrial market for big projects. Republic Services CEO Jon Vander Ark said the waste disposal company sees “a little bit of paralysis in an election year,” but he’s optimistic heading into the end of 2024 and start of 2025.

Watching the economy

More broadly, Eric Ashleman CEO of Idex, which makes components for everything from air bags to DNA testing equipment, said the race hasn’t helped the economic backdrop recently.
Nonfarm payrolls grew by the smallest number of jobs in October going back to late 2020 due to hurricanes and the Boeing strike. In this vein, Equifax said it saw softness in background screening volumes as executives consider what the outcome can mean for their businesses.
“Coming into the election, it feels like companies are being a little more prudent about the new hiring,” Equifax CEO Mark Begor said.
To be sure, some of the “election” mentions this year were tied to unrelated events like enrollment periods for health care. Other firms ranging from software company Tyler Technologies to credit card giant American Express said they haven’t felt impacts from the election on the business.

Source: American Express

“This company has been around a long time,” American Express CEO Stephen Squeri told analysts last month. “I mean, obviously, we didn’t have cards 174 years ago. But we’ve been around for lots of different elections; lots of different configurations of the House, the Senate and so forth.”
Equity Residential CEO Mark Parrell, meanwhile, said state and local government is considered more important to the business than which party is victorious on the top of the ticket. Indeed, the company is a real estate investment trust that invests in apartments.

Moving forward

Still, this cycle has appeared to engage a uniquely high number of leaders within corporate America’s largest firms. The 2024 mentions count equates to the word “election” during that timeframe coming up on calls of around one in every five companies within the S&P 500. It’s also more than triple the number of references during the same period in 2008.
D.R. Horton is seeing buyers “stay on the sidelines” given the expectation for lower mortgage rates in 2025 and the stress tied to the election, according to CEO Paul Romanowski. The homebuilder is attempting to boost demand by offering mortgage buydowns and focusing on building houses with smaller floor plans, he said.
Another member of D.R. Horton’s C-suite spoke about the election more bluntly.
“I think everybody would be happy the election is over,” chief operating officer Michael Murray told analysts on the company’s earnings call. “I think that will help buyer sentiment and the ability to move forward with their life decision.” More

U.S. payrolls grew by only 12,000 in October, a figure that left markets placid but fueled political contention. Unemployment remained 4.1 percent.Job creation stalled in October, a month battered by strikes and hurricanes, presenting an unclear picture of where the labor market was headed even as overall economic growth remained impressive.Employers added only 12,000 jobs on a seasonally adjusted basis, the Labor Department reported on Friday, substantially fewer than economists had forecast. The unemployment rate, based on a survey of households, remained 4.1 percent.The report is the last before a presidential election in which polls have consistently found the economy to be a top issue for voters, and the low figure supplied a talking point for Republicans. It also strengthened the case for another interest rate cut when Federal Reserve policymakers meet next week.“It’s hard to say, ‘This was a strong report if it were not for the strikes and hurricanes,’” said Oliver Allen, a senior U.S. economist at Pantheon Macroeconomics. “If the numbers still look like that next month, and we have another step down in revisions, it’s a pretty weak set of prints.”Gains for August and September were revised downward, bringing the three-month average to 104,000 — down from 189,000 over the six months before that.Markets took the muddled data in stride, but the political reaction was fierce, with former President Donald J. Trump’s campaign saying the report was “a catastrophe and definitively reveals how badly Kamala Harris broke our economy.”Wages Rise SlightlyYear-over-year percentage change in earnings vs. inflation More