Renowned economist Christophe Barraud, chief strategist at Market Securities Monaco and top-ranked on Bloomberg’s economic forecaster list for 11 of the past 12 years, predicts a Trump victory in the 2024 US presidential election.
His analysis anticipates significant economic changes depending on the election results, with potential growth in GDP but a risk of a rising federal deficit if tax cuts proceed without offsetting revenue measures.
Barraud’s forecasts, reported by Business Insider, project US GDP growth rates of 2.7 per cent in 2024—surpassing the consensus estimate of 2.6 per cent—and 2.1 per cent in 2025, which is above the predicted 1.8 per cent.
He attributes this growth partly to the current uncertainty that has slowed corporate spending and hiring, suggesting that more definitive election results will spur greater economic activity.
🇺🇸 #USElection2024 | Looking at different metrics such as betting markets, polls, election modelers’ forecasts, financial markets, as of now, the most probable outcomes are:
1️⃣ #Trump victory
2️⃣ #GOP clean sweep
*Polymarket: https://t.co/wHYuypGbPm
*Kalshi:… pic.twitter.com/RV2DlCw9Ft
— Christophe Barraud🛢🐳 (@C_Barraud) October 28, 2024
Barraud outlines three main scenarios for the 2024 election and how they might impact economic policy:
Harris Victory with a Divided Congress
In this scenario, minimal changes to economic policy are anticipated due to the likelihood of political gridlock. Barraud expects the status quo to prevail, with no significant shifts in corporate or personal tax policy, resulting in steady but unspectacular economic growth.
Trump Victory with a Divided Congress
Here, Trump would likely face constraints on his policy initiatives, particularly on domestic matters like tax reform. Barraud suggests that with limited power, Trump’s administration might focus on foreign policy, including possible trade restrictions. While this would likely have a neutral short-term effect on U.S. GDP, Barraud cautions that it could hinder global growth.
Trump Victory with Republican Sweep
Barraud sees this scenario as the most plausible outcome and anticipates that if Republicans control both Congress chambers, Trump could pass extensive tax cuts. This scenario would likely boost GDP growth in 2025, with estimates ranging between 2.1 per cent and 2.3 per cent. However, Barraud warns that implementing tax cuts without finding alternative revenue sources could worsen the federal deficit, leading to long-term economic concerns.
Barraud also foresees changes in Treasury yields based on the election outcome. He predicts that the yield on the 10-year Treasury bond could increase to 4.5 per cent if Trump wins, potentially reaching 5 per cent with a Republican sweep as markets react to anticipated fiscal policies and investor risk premiums rise. Conversely, a split Congress might keep yields more moderate, around 4.35 per cent.
Other analysts offer diverse perspectives on the election. Polling analyst Nate Silver currently estimates a Trump victory probability at 53.1 per cent, while historian Allan Lichtman, known for his “Keys to the White House” model, believes Kamala Harris may have an edge.
Lichtman’s model, which focuses on factors favoring the incumbent party, contrasts with Silver’s data-driven forecast. As election day approaches, analysts emphasize caution, noting that polling and models are subject to substantial uncertainty.
As the race remains competitive, Barraud’s economic outlook underscores the potential implications of each outcome. While a Trump administration could catalyze short-term economic gains through tax cuts, the risk of an expanded deficit looms large.
Regardless of the outcome, Barraud’s projections suggest that corporate investments and broader economic activity could accelerate once political uncertainties are resolved.
