The markets hate surprises and consumers do too. Large purchases, like homes and autos, will stall. No one will want to make important, major purchases in the immediate follow-up to this election. Smaller purchases will also decline in the short-term as consumers hold back for fear of how to handle the election on a personal basis.
2. Higher costs.
The election will have an inflationary effect because labor costs will increase and over time, so will imported products. That means operating retail stores will become more expensive and consumer products, particularly those imported, will be under pressure to increase prices when there is more pressure for tariffs on imports and less labor to load, move and sell consumer products. Companies that use technology to lower labor costs, like Amazon and Wal-Mart, will be in a better position than more labor-intensive retailers. Fast food purveyors who have high labor content in their products will suffer.
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What will the Fed do about it? They will also be uncertain about how to handle it in the immediate future. Higher inflation is a certainty and that will generally lead the Fed to act to raise interest rates, increase borrowing costs, and cool the economy down. But if the inflation itself is strong enough to drive the country into recession, raising interest rates will not be an option. If that happens, the Fed will be virtually powerless to stop it since it has already used most of its recession-fighting tools. Congress will be loath to increase spending which means there will be no stimulus to be found anywhere. A recession that results from the price increases following this election will therefore be fairly long.
The fashion industry will have several new icons to watch and amuse themselves with. Melania and her stepdaughters’ appearances will generate interest, amusement and possibly retail traction.
America has proven to be the most resilient country in the world time and time again. But nothing like this election has ever been seen before and the road ahead is less clear than ever.
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