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Policy, Politics & Portfolios

Published January 30, 2024

What federal budget, regulatory, and trade decisions could mean for investors.

What's in the economy's election-year toolkit: Tax cuts

  • Congressional lawmakers are crafting a $135 billion, bipartisan package to expand the child tax credit (CTC) in exchange for extending three of the 2017 tax cuts for businesses.
  • The expansion of the CTC would boost disposable income for consumers while tax benefits would provide retroactive relief to businesses, particularly in the Industrials, Information Technology, and Health Care sectors.
  • Even with this assistance, however, our view is that the economy will continue to slow, mainly due to the lagged impacts of aggressive Federal Reserve tightening.

What's in the economy's election-year toolkit: Infrastructure spending

  • Infrastructure spending has helped push the economy ahead over the past year.
  • This large spending is intended to benefit the economy through 2030 and likely beyond.
  • Some segments of infrastructure spending are well underway while others have been slower to have an economic impact.

Summarizing the economy’s election-year toolkit

  • Consumer spending likely would be the chief beneficiary of the major policy initiatives now being implemented or discussed in Washington, with support extending to small businesses and to capital equipment.
  • Our view is that delays and offsets to government stimulus programs will dampen stimulus, while any net positive federal efforts to rev up the economy will sustain inflation above the Federal Reserve's (Fed’s) target, keep interest rates higher for longer, and ultimately disappoint the financial market optimism that opened the year.

Article written by:

Global Investment Strategist

Investment Strategy Analyst

Senior Global Market Strategist
Investment Strategy Analyst

Global Strategist