The late-night result from Tuesday's election was a bit of a shock to pollsters, pundits and the general public. A shock but maybe not a surprise, given the tight and contentious race that preceded it. Any market volatility is understandable, since we don't know which policy priorities President Trump will implement. Although the House of Representatives and the Senate are both under Republican control as well, it is not clear how the relationship between the executive and legislative branches will evolve and which measures from the new president they will pass.
If we see tariffs, shredded trade agreements, deportations and a border wall, a recession in 2017 wouldn't be a surprise. But if the administration's focus is on tax cuts, deregulation and fiscal stimulus through infrastructure spending, we could see an acceleration in U.S. growth. Investor and media attention will be on comments from the new president to see where his true priorities stack up.
