Your savings, your loan, your job. DR's economic correspondent provides an overview.
The Americans' election tomorrow may influence your economy. Both stocks, interest rates, and international trade may be affected by the outcome of the election, says DR's economic correspondent Casper Schrøder. (Photo: © DAVID BECKER, ROBERTO SCHMIDT, Ritzau Scanpix)
Economy has played a significant role in the American election campaign.
When Trump and Harris have taken the stage, long sections of their speeches have been allocated to the topic.
They have talked about the great grinding economic gears - world trade, tariffs, state aid, and investment packages.
And then it has been about the individual American family's household budget, supermarket prices, the heating bill, income tax, housing prices, and families with children’s money.
But the American election can also have an impact on personal finances here at home in Denmark. DR's economic correspondent Casper Schrøder has gathered some of the points where this can happen.
If your savings are invested in stocks, the days around the election may bring fluctuations.
Typically, stocks tend to fall slightly leading up to the election due to uncertainty, but when the election results come in, they tend to rise a bit again.
It is certainly the picture from previous elections. Therefore, a result that takes time to come can also create nervously fluctuating rates.
In the long term – months and years – the markets are difficult to predict, and there are many other forces than the American president that influence them, just as the final distribution of power in Congress, which is also up for election, is of great importance.
Nevertheless, there are some main lines in the experts' expectations for the courses, depending on whether the president will be named Harris or Trump.
Republican Trump has on paper the most business-friendly policy. Taxes should be lowered, energy prices should be lowered, bureaucracy should be eliminated, and production in the USA should be supported. This is good for stocks, especially American ones. It was the same recipe that sent the prices up when Trump was elected in 2016.
In contrast, the Democrat Harris is campaigning to raise the corporate tax and introduce capital gains tax on investments. Her economic policy is more concerned with the individual American's personal finances than the economy of businesses. That kind of thing does not belong to investors' favorites.
But with Trump also comes a bitter taste for the stock market. The Trumpian unpredictability can make businesses and consumers more cautious about spending money, and that can hit growth. In addition, there is the risk that Trump, with his policy of significantly raising tariffs, could trigger a trade war with China and Europe, which could also impact overall economic growth. These are factors that can pull stocks down.
Many Danes have invested money in stocks related to sustainability in recent years, such as Vestas. The green stocks are probably the sector that has the most at stake in the election.
The green stocks have, according to DR's economic correspondent, the most at stake in connection with the presidential election in the USA. (Photo: © Søren Bidstrup, Ritzau Scanpix)
Harris will continue Biden's active policy with extensive tax deductions for investments in renewable energy and similar areas – Trump has vowed to close all such arrangements.
Many of the companies say that their projects in the USA are primarily dependent on the politics of the individual states, but the courses have already spoken their clear language. As Trump has advanced in the polls, there has been pressure on the green stocks.
If you have shares in Novo Nordisk, which has the USA as its largest market, you can immediately be reasonably calm about the presidential election.
For decades, there has been heated political debate about high prices for medicine, and in 2016 and 2020, Trump raged again and again from the podium against the large pharmaceutical companies and vowed to intervene. However, it turned out to be more difficult than he expected.
This time there has been quite silence from the podiums about the sector, and no major plans have been presented.
If Novo Nordisk and the investors cheer for a president, it probably leans politically towards Trump's Republican side
Casper Schrøder, economic correspondent at DR
If Novo Nordisk and the investors cheer for a president, it politically leans towards Trump's Republican side. Both candidates have broadly promised lower prices on medicine, but Harris has the most concrete plans by continuing Biden's line with mandatory negotiations for certain types of medicine included in specific public health programs.
The American election may also have implications if you have borrowed money. It is about the interest on your debt.
The American interest rate is among the world's most important. When the interest rate level changes in the USA, it also changes in the rest of the world. Now it is not the American president who sets the interest rate in the USA, that job is left to the politically independent central bank, the Federal Reserve. Nevertheless, the election can have significance.
Both Trump and Harris are proposing massive public spending in their campaign promises. This is money that is pumped into the economy and gets the wheels turning. But the money can also fuel inflation, price increases in society, and this is where interest rates come in.
The Federal Reserve may decide to counter the increased inflationary pressure by either raising interest rates or refraining from lowering them as much as they had planned, in order to take some of the momentum out of the economy.
The interest rate decision will immediately be reflected in interest rates around the world – also when you go to the bank in Denmark. This can have a significant impact on thousands of Danish mortgage holders who are currently hoping for further interest rate declines, as they can then refinance their high-interest loans with a financial gain as a result.
As mentioned, both candidates are set to be generous with public funds. However, according to calculations, Trump is the most generous, and if the logic of economic analysts holds, then it is a Republican victory – especially if it also applies to Congress, which is the key to implementing much of the fiscal policy – that will push interest rates up and make your debt more expensive than otherwise.