US Election 2020 - Capital Economics

The outcomes of the Georgia Senate elections mean the Democrats will after all take control of both houses of Congress, as well as the White House, for the first time since 2010.

Our view

We don’t think this clears the path for President-elect Joe Biden’s ambitious legislative agenda. In the Senate, he falls far short of the 60 votes needed to pass most legislation, while the Democrats’ razor-thin majority in the House poses a similar problem.

That reduces the likelihood of an early vote on increased fiscal relief, although Democrats may instead work on a bigger relief package down the line which could include other priorities like climate-related investment and some tax increases. More immediately, this clean sweep will ease confirmation of Biden’s cabinet picks, and allow Democrats to undo some of Trump’s deregulatory actions.

On foreign policy, we expect Biden to pursue a closer relationship with the European Union, in part to build alliances that could be more effective in countering the growing global influence of China. More generally, while Biden will be less protectionist than Trump, we don’t expect him to enthusiastically embrace renewed globalisation. The upshot is that, regardless of who is President, US-China relations are likely to remain tense.

Trump vs Biden: The Aftermath

In the immediate wake of the 3 November vote, Paul Ashworth, Michael Pearce and Andrew Hunter from our US Economics service were joined by Senior Markets Economist Oliver Jones to discuss the election outcome. While acknowledging that many headline results were yet to be announced, the team’s discussion took in the market reaction so far, likely scenarios – including the implications of possible legislative gridlock – and paths ahead for the US economy and markets.