U.S. President Joe Biden is holding out for reelection despite growing calls for him to resign the Democratic nomination, but one expert says his refusal to withdraw from the 2024 presidential race could have an impact on the economy.
Aaron Cirksena, founder and CEO of MDRN Capital, said, “In short, Biden’s continued candidacy may bring some policy consistency, but it also comes with considerable economic risks. For example, market volatility, rising debt, increased taxes, trade issues, changes in the energy industry, inflation, and more regulation, which is a huge challenge for companies and investors.”
Cirksena said that while some believe Biden's insistence on running could mean stability, it could actually make markets very uneasy. He said "investors don't like uncertainty very much, and his policies have caused some commotion before."
“I think the market is pricing in the fact that if Biden continues to run, Trump will likely beat him,” Cirksena acknowledged in an interview.
Cirksena noted that Biden's massive spending plans, especially on infrastructure and social programs, could push the U.S. national debt even higher. "This is not just a number, it could have real consequences for economic stability and future generations."
When asked about Trump's spending spree during his first term, the MDRN Capital CEO said that because of the special reasons of the epidemic, Trump was in a special situation at the time where he needed to spend money to keep the economy running. He said, "Under Biden's presidency, as the COVID-19 pandemic subsides, these expenditures are still continuing and may grow at a faster rate. At some point, I think you have to start reducing spending."
Regarding Biden's tax increase policy, Cirksena said, "Raising taxes on corporations and the rich may sound good to some people, but it could scare off business investment, which could slow growth, hurt corporate profits, and could lead to layoffs."
During Biden's term, inflation soared to 9.1% from 1.4% in June 2022. Although the year-on-year growth rate of the US CPI in June this year has slowed to 3%, it is still far above the Fed's 2% target.
Cirksena said the prospect of another Biden term could reignite concerns about further increases in unnecessary government spending. He said:
“All this stimulus could overheat the economy and cause inflation to rise, and if that happens, our purchasing power will take a hit and the Fed might have to intervene by raising interest rates, which could slow growth.”
Article forwarded from: Jinshi Data