Syz Group: U.S. Midterm Results May Have Mixed Effects on Growth and Inflation

According to Jin10, Syz Group Chief Economist Reto Cueni said the U.S. midterm election results could slightly weigh on economic growth by weakening fiscal and investment momentum, while falling energy prices could help curb inflation, ease pressure on interest rates, and boost household purchasing power. Cueni said the results created opposing forces for the U.S. economy: policy support for growth could weaken, while improvements on the supply side could partly offset that effect. With Democrats controlling Congress and U.S. President Donald Trump retaining veto power, the likelihood of another large-scale tax-cut or spending plan is significantly lower. Cueni said political gridlock makes further fiscal stimulus less likely while increasing the risk of disorderly debt-ceiling negotiations or a temporary government shutdown.