While the United States is currently going through a much tighter-than-expected election, the country's extreme division is bad news for the U.S. economy.
However, this should favor the stock market.
Nicolas Barré takes stock of a current economic issue.
The extreme political division of the United States which emerges from the ballot will penalize the economy and favor the stock market.
It's a bit of a paradox, isn't it?
The absence of a democratic "blue wave" in the US elections was greeted as soon as Wall Street opened with an increase of nearly 3%, driven by the technology sector.
The Gafa are breathing, Facebook has jumped 8% and Google 7%.
Why ?
Because deprived of the clear majority they had dreamed of in Congress, the Democrats, if they win, will not be able to tighten the regulation of the tech giants or increase the taxation of capital gains, feared by the sector before the 'election.
The best that can happen to sectors that are very dependent on regulation like Tech, Finance or Pharmacy is that Congress and the executive are paralyzed and we go straight regardless of the occupant of the House- White.
But this looming political blockage is not good for everyone.
No, especially for the sectors which had bet on a large democratic victory to revive public works or green energies.
An emblematic company in this sector like Caterpillar, construction machinery, for example unscrewed this Wednesday on Wall Street.
But more fundamentally, this political deadlock in Washington will be penalizing for the economy as a whole for several reasons.
First, because we will experience a period of uncertainty due to legal remedies.
And if Joe Biden wins, the transition with the outgoing team will be chaotic.
Then because whoever wins, he will have neither the will, if it is Donald Trump, nor the political capital, if it is Biden, to impose a national strategy to manage the second wave of the virus.
However, this cacophony between states is devastating for the economy, for trade, for recovery.
It is for these reasons that several economic institutes have revised their forecasts for a rebound in growth for next year downwards, to around 3.6%.
The next American administration will also find it difficult to carry out fundamental reforms.
And this is a major point.
The pandemic has exposed the health coverage weaknesses of tens of millions of Americans but, with a Congress so divided, there is little chance that this topic will advance.
Likewise, the new stimulus package for the economy, even if Joe Biden wins, will not be as ambitious as one might have imagined, as the United States has real needs for remission. in terms of their infrastructure.
And it is future generations who will pay for these blockages.
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