Businesses and consumers are hesitant to "spend money", there is reason to temporarily put aside worries.

According to surveys and comments from business executives, consumers and businesses have been delaying purchases and investments for months. This is partly due to the 2024 US presidential election.

Presidential candidates Kamala Harris and Donald Trump have very close approval ratings. (Source: The Bulletin Times)

Both US Vice President Kamala Harris and former President Donald Trump have put forward economic agendas aimed at improving consumer spending power and strengthening the economy, but each has a completely different approach.

This leads to various impacts related to taxes and inflation.

However, according to CNN , businesses do not yet have a clear understanding of the direction of U.S. economic policy at this time.

The readily available information for businesses is: The latest interest rate decision from the US Federal Reserve (Fed), expected to be announced on November 7th.

The Fed lowered borrowing costs in September 2024 – the first time in more than four years – while signaling further interest rate cuts.

The choice between two different economic realities

Experts predict that the outcome of the US election will shape the direction of the economy in the coming years, so postponing important decisions such as expanding a business or buying a house until after the election is wise.

Trump's economic vision aimed for drastic changes, such as large-scale deportations of immigrants and the imposition of high tariffs across the board.

Meanwhile, Harris's agenda proposes more conservative solutions, such as tax deductions of up to $50,000 for newly established small businesses, in an effort to win the support of the American middle class.

While the ultimate goal of both candidates is to provide American citizens and businesses with some form of economic support.

A Wall Street Journal poll of economists found that 68% of respondents believe that commodity prices will rise faster under Trump's plan than under Harris's.

High tariffs were a key part of former President Trump's economic plan and threatened to increase costs for businesses. Higher tariffs would likely hit the pockets of US-based importing businesses, not foreign countries as Trump claimed. This would ultimately lead to faster consumer inflation.

A recent quarterly survey of chief financial officers across industries conducted by Duke University (North Carolina, USA) found that nearly one-third of respondents said they had "postponed," "scaled back," "delayed indefinitely," or "permanently canceled" short-term and long-term investment plans this year due to uncertainty surrounding the election outcome.

Consumers are hesitant to make any major purchasing decisions, such as buying a house.

Lawrence Yun, chief economist at the National Association of Realtors, believes that election uncertainty may be the reason for the sluggish sales of existing homes in recent months.

"Perhaps people are just waiting to see the election results before making important decisions, like buying or selling a house," he asserted.

Will the Fed cut interest rates?

Besides the US election, the world is also closely watching to see whether interest rates in the world's largest economy will fall.

Previously, on November 1st, the latest employment figures released by the US government showed that, excluding the temporary impact of recent strikes and natural disasters, the job market was cooling down in an orderly manner, rather than experiencing a sudden decline.

In recent speeches, Fed officials have pledged to keep the labor market stable and argued that current interest rates are still too high to be holding back economic growth.

Therefore, although the September 2024 employment figures were better than expected, the market as a whole shows no signs of overheating again.

Therefore, it is likely that the Fed will cut interest rates this week. Investors are almost certain that the central bank will cut interest rates by 0.25 percentage points.

Lower interest rates could attract hesitant homebuyers back into the market. For businesses, lower interest rates allow them to continue implementing plans that were based on the expectation of low interest rates.

Therefore, this week, most of the worries of people and businesses in the US and around the world will begin to be alleviated.

Source: https://baoquocte.vn/bau-cu-my-2024-doanh-nghiep-nguoi-tieu-dung-ngan-ngai-xuong-tien-co-ly-do-de-tam-gac-au-lo-292530.html