The slowdown in the US economy recently has been due to the forthcoming election in November 2016.
Some business economists believe that uncertainty about the election is detrimental for growth projections this year.
The National Association for Business Economics has marked down their outlooks for this year, fixing the total growth in gross domestic product at a modest 1.8%. It is down from 2.2% in the group’s survey in March and 2.6% in December 2015.
The economy in the US went through a period of weak economic performance in the first quarter of 2016, reducing to a yearly growth rate of just 0.8 percent. The economic data have been reflecting mixed indications.
In April 2016, consumer expenditure surged, recording the largest gain in almost seven years. The job market report released by the government on June 3rd, 2016, showed the pace of hiring reduced drastically in May and was weaker than initially reported two months before.
The downturn comes as businesses are becoming progressively anxious about the result of the presidential election, and the broader uncertainty regarding the policies proposed by the next President. The political uncertainty is perceived as a drag on the economy in the US this year.
According to Greg Daco, head of U.S. macroeconomics at Oxford Economics and a NABE survey analyst, “Businesses are generally prepared to not have everything go their way, but they have a much harder time when they don’t know what’s going to happen or what to expect.”
Certain precise policy offers have also heightened concerns, including those by probable Republican presidential nominee Donald Trump to take tough actions on some US trade partners such as China and Mexico.
Such a policy when combined with an economic model would have a negative impact on the US economy if it starts a trade war.
Businesses as well as consumers are cautious about expenditure and investing. Market experts have cut their growth projections across a wide array of sectors – business investment, consumer spending, industrial production and corporate profits.
Corporate stakeholders must monitor the latest trends and be prepared for any contingency. Organizations must focus on their internal dynamics to safeguard their business from external factors.