Hillary Clinton and Donald Trump have proposed bold growth plans that would impact the economy in divergent ways. Neither, though, is likely to see the light of day.
While anxious voters mull which of the two highly unpopular candidates has the better plan — or at least will do less damage — there's a growing sense on Wall Street that the end result will be simply more of the same. Washington will remain in a partisan standoff, with the result being growth at a marginally faster pace that will bring inflation and higher interest rates.
"Our base case is continued gridlock in Washington D.C. and we do not anticipate major changes to U.S. fiscal policy or economic policy," Nomura economists said in a report for clients. "With this outlook, continued partisan gridlock after the election seems quite likely. Consequently, our base case forecast for the U.S. economy does not anticipate material changes to U.S. economic policy."
It's not that the candidates won't try.
The Republican Trump arguably has the more aggressive plan, with steep tax cuts for individuals and businesses coupled with sharp spending increases for infrastructure and the military. Clinton also proposes a stimulus package, but her spending plan is offset, though not completely, with tax increases.
Clinton wants immigration reform that Nomura said will add 2.5 million new members to the workforce, while Trump wants to deport illegal immigrants and slap tariffs on products from nations that he believes engage in unfair trade practices.
Ultimately, though, political reality sets in.