Fitch Ratings-New York-08 July 2024: The outcome of November’s U.S. elections could mark a significant pivot point for federal policy with implications for credit, Fitch Ratings says in a new report.
A status quo outcome where incumbent President Joe Biden returns to office with a split Congress would likely mean a broad continuation of major policies. A victory by presumptive Republican nominee and former President Donald Trump would likely mean changes to key policy areas, especially should the Republicans take control of the Senate while retaining or growing their majority in the House of Representatives.
In the event of a change in administration, we believe there are seven key policy themes that could have the biggest impact to credit. These are trade protectionism, persistent fiscal pressures, geopolitical positioning & foreign policy, a climate policy rollback, financial deregulation, social policy reform and restrictive immigration. Trade protectionism and fiscal pressures have been bipartisan trends, where we would expect a Trump administration to mark an amplification in policies. The other policy areas would likely experience sharper pivots.
There would likely be credit positives and negatives from a major policy shift. In the short term, there would not likely be broad-based direct ratings effects, barring the passage of certain policies that would require legislation and have a low probability of occurring. However, over the medium and longer terms, indirect feedthroughs could prove more meaningful to certain sectors.