US Economics Analyst_ Election 2024_ Even More Uncertain (Phillips_Krupa)(1)(1)

1 July 2024 | 1:14PM EDT
US Economics Analyst
Election 2024: Even More Uncertain (Phillips/Krupa)
n Polling over the last several weeks has shown a close presidential election, with Jan Hatzius
+1(212)902-0394 | jan.hatzius@gs.com
President Biden narrowly but consistently trailing former President Trump in Goldman Sachs & Co. LLC
national polling and, more importantly, in the key swing states likely to deliver Alec Phillips
+1(202)637-3746 | alec.phillips@gs.com
the marginal electoral votes to the winner. National polling and presidential Goldman Sachs & Co. LLC
approval stand below the levels of incumbents who have won reelection. David Mericle
+1(212)357-2619 |
david.mericle@gs.com
n The first presidential debate has injected new uncertainty into the race. Most Goldman Sachs & Co. LLC
recent incumbents lost their first debate, as judged by opinion polls and with an Spencer Hill, CFA
+1(212)357-7621 | spencer.hill@gs.com
average 3-4pp swing toward the challenger in the poll spread. The few polls Goldman Sachs & Co. LLC
released since last week’s debate show a similar shift. Ronnie Walker
+1(917)343-4543 |
ronnie.walker@gs.com
n The implied probability that former President Trump will win rose by roughly 6pp Goldman Sachs & Co. LLC
in prediction markets during the debate and has risen slightly further since. The Manuel Abecasis
+1(212)902-8357 |
implied odds of a Republican sweep also rose but by less than the move in the manuel.abecasis@gs.com
Goldman Sachs & Co. LLC
presidential race, which is intuitive, as candidate-specific developments at the
Tim Krupa
presidential level are less likely to affect congressional outcomes. +1(202)637-3771 | tim.krupa@gs.com
n Regarding policy, a greater shift in the odds of the presidential outcome with less
Elsie Peng
of a shift in expectations for Congress should mean that policy expectations +1(212)357-3137 | elsie.peng@gs.com
should shift more with regard to executive actions a Trump administration could
Jessica Rindels
take—tariffs, immigration, and regulation—than in areas that need congressional +1(972)368-1516 |
jessica.rindels@gs.com
approval. For example, fiscal policy expectations should change less based only
on changes in the presidential outlook. The exception to this is a decreased risk
_
of corporate and upper-income individual tax hikes under any scenario other than
a Democratic sweep, the implied probability of which has declined.
n Markets reacted to shifting probabilities with higher equity futures, modestly
higher Treasury yields, and mixed changes in FX. The modest reaction in yields
could be attributable to the fact that the fiscal policy implications of a shift in
presidential probabilities alone are less clear cut, as control of Congress is at
least as important in this area. Conversely, regulation-sensitive equity sectors
had a clearer reaction to the changing presidential probabilities, which is intuitive,
as the regulatory agenda depends less on congressional outcomes.
n Election-related uncertainty, as measured by the Economic Policy Uncertainty
Index, has already been higher this year than usual, and historical patterns and
recent events suggest it is likely to rise further over the months ahead. While
the effects of election-related policy uncertainty are usually fairly modest and
Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html.
Goldman Sachs US Economics Analyst
there is little empirical relationship between growth and proximity to the election,
policy uncertainty in the past has been associated with slower business investment
and durable goods consumption.
_
1 July 2024 2
Election 2024: Even More Uncertain
Going Into the Debate, Where Did the Presidential Election Stand?
National polling has shown President Biden with a modest but consistent deficit in
support versus former President Trump. Prior to the debate, our poll average showed
Biden behind by around 1pp in two-candidate polls (i.e., polls that name the two major
party candidates but allow voters to indicate they support someone else or have no
preference).
This puts Biden below the bottom of the range of incumbents who have won reelection.
In fact, Biden has been polling below the median of incumbents who lost reelection for
most of this year, though this is no longer the case as we have entered the part of the
campaign in which support for defeated incumbents had typically begun to erode.
Exhibit 1: Biden Is Polling Well Below the Median of Incumbents Who Were Reelected
Percentage points Percentage points Percentage points Percentage points
70 70 20 20
Polling Margins:
First-Term Incumbents Who Were Reelected Polling Margins:
(1956,1964, 1972, 1984, 1996, 2004, 2012) First-Term Incumbents Who Were Defeated (1976,
60 60 1980, 1992, 2020)
10 10
50 50
0 0
40 40
30 30 -10 -10
20 20
-20 -20
10 10
-30 -30
0 0
-10 -10 -40 -40

-200 -180 -160 -140 -120 -100 -80 -60 -40 -20 Election -200 -180 -160 -140 -120 -100 -80 -60 -40 -20 Election
Day Day
Range Median Biden Range Median Biden
20 20 20 20
Polling Margins: Polling Margins:
_
Open Contests, Incumbent Party Reelected (1988) Open Contests, Incumbent Party Defeated (1952,
1960, 1968, 2000, 2008, 2016)
10 10 10 10
0 0 0 0
-10 -10 -10 -10
-20 -20 -20 -20
-30 -30 -30 -30
-40 -40 -40 -40

Day Day
1988 Biden Range Median Biden
Source: Wlezien & Erikson 2002, PollingReport.com, RealClearPolitics, FiveThirtyEight, Goldman Sachs Global Investment Research
Presidential approval tells a similar story. As shown in Exhibit 2, President Biden’s

approval rating has ranged from 37% to 40% since the start of the year, below the level
of incumbents who have been reelected and in line with incumbents who have not.
1 July 2024 3
Exhibit 2: Biden’s Approval Rating Is Around the Median of Incumbents Who Were Not Reelected
Presidential Approval: Presidential Approval:
80 80 80 80
First-Term Incumbents Who Were Reelected First-Term Incumbents Who Were Defeated (1976,
(1956,1964, 1972, 1984, 1996, 2004, 2012) 1980, 1992, 2020)
70 70 70 70
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
-200 -180 -160 -140 -120 -100 -80 -60 -40 -20 Election Election
-200 -180 -160 -140 -120 -100 -80 -60 -40 -20
Day Day
Range Median Biden Range Median Biden

80 Presidential Approval: 80 80 Presidential Approval: 80
Open Contests, Incumbent Party Reelected (1988) Open Contests, Incumbent Party Defeated (1952,
1960, 1968, 2000, 2008, 2016)
70 70 70 70
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
Day Day
1988 Biden Range Median Biden
Source: FiveThirtyEight, Goldman Sachs Global Investment Research
How Has Thursday’s Presidential Debate Affected the Race?

_
Immediately following the debate, a CNN snap poll showed 2/3 viewers believed former
President Trump had won the debate, while 1/3 believed President Biden had won. This
continues a pattern of incumbents underperforming expectations in their first debate
(the main exception was Bill Clinton’s first debate against Bob Dole in 1996). In the last
three election cycles, incumbents who voters believed lost their first debates saw their
polling margins drop by around 5pp on average.
1 July 2024 4
Exhibit 3: Incumbents Tend to Underperform in the First Debate
Percentage points Percentage points

60 Change in National Poll Margin Following 6
First Presidential Debate
40 4
20 2
0 0
-20 -2
-40 -4
-60 Net %, Incumbent Won Debate (left) -6
-80 Change in Poll Margin, Incumbent (right) -8
-100 -10
1976 1980* 1984 1992 1996 2004 2012 2020 2024
* Second debate (Oct. 28, 1980) shown; Carter did not attend first scheduled debate
Source: Wlezien & Erikson 2002, PollingReport.com, RealClearPolitics, FiveThirtyEight, Gallup, CNN, Goldman Sachs Global Investment Research
There has been little polling released since last week’s debate but the few polls that had
been released as of June 30 showed a similar if slightly smaller effect thus far, averaging
a 3pp Trump advantage compared with roughly even polling in June until that point
(Exhibit 4).
Exhibit 4: Post-Debate National Polls Advantage Trump

10 10
Biden vs. Trump National Polls
(Individual Polls and 2-week Moving Average)
8 8
6 6
State
of the First Debate
4 4
_
Union
2 2
0 0
-2 -2
-4 -4
-6 -6
-8 -8
-10 -10
2/26 3/4 3/11 3/18 3/25 4/1 4/8 4/15 4/22 4/29 5/6 5/13 5/20 5/27 6/3 6/10 6/17 6/24 7/1
Source: RealClearPolitics, Goldman Sachs Global Investment Research
While there are not yet any post-debate swing-state polls, the swing states most likely
to deliver the marginal electoral vote to the winner have been leaning around 2pp more
to the Republican side than the national polls and moves in those polls have tended to
1 July 2024 5
track fairly closely with moves in the national polls.
Exhibit 5: Biden Trails in the State Currently Most Likely to Decide the Election—Pennsylvania

8 8
Electoral Votes by State,
6 ME Ordered by Current 30-Day Polling 6
NH
4 Average (Net % Favoring Biden) 4
Biden polling lead
2 2
MN VA
0 0
MI WI PA
-2 GA NV AZ NC -2
FL TX
-4 -4
Trump polling lead
-6 -6
-8 -8
270 EVs to Win
-10 -10
As of 7/1/2024
-12 -12
198 269 340
Electoral votes
Source: RealClearPolitics, Goldman Sachs Global Investment Research
Will President Biden Be on the Ballot in November?

Soon after the start of the debate, the implied probability that President Biden would be
the Democratic nominee declined sharply in prediction markets. However, at points over
the last few days the odds had recovered somewhat. At this point, the implied
probability in prediction markets sits around 60% that he will be the nominee.
While there have been many high-profile calls for Biden to step back from the race from
the media, political strategists, and some former officials, senior Democrats have been
nearly unanimous in their continued public support. The Biden campaign has indicated
he plans to remain in the race and that he will attend the second debate scheduled for
_
Sep. 10.
The decision to run is Biden’s to make, as he won nearly all the delegates to the
Democratic convention in the primaries earlier this year, and those delegates are
pledged to support his nomination. While the delegates are not legally bound to support
the nominee to whom they are pledged, DNC rules stipulate that they “shall in all good
conscience reflect the sentiments of those who elected them” and it appears very
unlikely that delegates alone would shift the outcome of the nomination.
1 July 2024 6
Exhibit 6: Prediction Markets Imply 56% Odds Trump Wins and 60% Odds That Biden is the Democratic Nominee
Percent Prediction-Market Implied Odds: Percent Percent Prediction-Market Implied Odds: Percent
60
Which Party Will Win the 2024 Presidential Election? 60 90 Who Will Be the 2024 Democratic Nominee? 90
Debate Joe Biden
58 58
85 85
56 56
80 80
54 54
75 75
52 52
50 Democrats Republicans 50 70 70
48 48
65 65
46 46
60 60
44 44
42 42 55 Debate 55
40 40 50 50
25-Jun 26-Jun 27-Jun 27-Jun 28-Jun 29-Jun 29-Jun 30-Jun 27-Jun 14:00 28-Jun 15:00 29-Jun 16:00 30-Jun 17:00
23:00 13:40 5:20 20:00 11:40 3:20 18:00 9:40
Source: PredictIt, Bloomberg, Goldman Sachs Global Investment Research
What if President Biden Were No Longer in the Race?

In the event that the nomination process reopens before the convention, it would be
decided there. While this has no precedent in the last few decades, before the major
parties shifted to primary elections to determine nominations in the 1970s, deciding
nominations at the party convention was standard procedure.
First, a candidate would need to gather a minimum level of support from among the
4,696 delegates to the convention (3,949 pledged delegates and 747 “superdelegates”).
Current Democratic National Committee (DNC) rules require a candidate for the
nomination to file a petition signed by at least 300 delegates and no more than 600,
with no more than 50 from any single state. Delegates (including superdelegates) may
sign only one petition for president. The presidential nominating process at the
convention is unrelated to the vice-presidential process, so the rules would technically
confer no advantage to Vice President Harris in this process.
_
Once a slate of candidates has been determined, the convention would hold roll call
votes until one candidate won the majority of delegates. In the first vote, only pledged
delegates (now unbound) may vote; in subsequent rounds, superdelegates may vote as
well.
In the event of an open nomination, it is far from clear whom delegates would choose.
That said, prediction markets and the very limited polling conducted following the
debate suggest Vice President Harris would start with an advantage.
1 July 2024 7
Exhibit 7: VP Harris Would Very Likely Be Considered the Initial Frontrunner for the Nomination Should President Biden Choose to Step
Aside
Percent Percent Percent Percent

Prediction Market-Implied Odds: If These Were the Candidates, Who Would You Vote For?
20 Who Will Be the 2024 Democratic Nominee 20 100 100
90 90
80 46 80
15 15 48 48 47 46 47 46 46 46
70 70
60 60
10 10 50 7 7 9 10 9 10 12 11 50
10
40 40
30 30
5 5
45 45 44 44 44 44 43 43 43
20 20
10 10
0 0 0 0
Kamala
Michelle
Clinton
Pritzker
Newsom
Gretchen
Buttigieg
Shapiro
Klobuchar
Hillary
Kamala
Pritzker
Newsom
Whitmer
Gretchen
Obama
Biden
Buttigieg
Klobuchar
Booker
Shapiro
Harris
Whitmer
Harris
Josh
Gavin
Joe
Cory
Josh
Gavin
Pete
JB
Pete
Amy
JB
Amy
Survey of 1k likely voters on 6/28
Source: PredictIt, Data for Progress, Goldman Sachs Global Investment Research
If the nomination opened up after the convention, the members of the DNC—a smaller
group that is substantially similar to the “superdelegates” at the convention—would
choose the nominee. Depending on how close to the election this occurred, some
states might not accommodate the change on the physical ballots (early voting will also
begin in some states by late September and will be under way in most states by
mid-October). While votes for a nominee who is no longer in the race would still go to
the party’s candidate—a vote for president in the general election is technically a vote
for that party’s slate of electors—such a situation would nevertheless confuse voters
and would likely affect election results.
What Implications Does Turbulence in the Presidential Contest Have for

Congressional Elections?
To the extent that recent events have changed the relative odds of presidential
_
outcomes, this should have more limited implications for control of Congress.
Democrats have been running well ahead of President Biden in competitive Senate
races, and the generic ballot poll shows congressional Democrats with slightly higher
levels of support than the president.
1 July 2024 8
Exhibit 8: Congressional Democrats Are Polling Stronger Than President Biden
Percent Percent Percentage points Percentage points

Congressional vs. Presidential Polling Averages 2024 Key Senate Races
3 3 30 by 2016-2020 Presidential Vote Average 30
Congressional Generic Ballot (D Minus R)
Dem.- Current composition: 51 D, 49 R
Presidential (Biden Minus Trump) leaning
20 20
2 2
D/Biden
polling lead
10 10
1 1
0 0
0 0
-10 GOP- -10
leaning
-1 -1 states
R/Trump -20 Senate: Avg. of Recent Polls -20
polling Presidential: Avg. of Recent Polls
lead Democratic Seat
-2 -2 -30 Republican Seat
Open (Incumbent Not Running) -30
10 safe D seats up 9 safe R seats up

-3 -3 -40 -40
Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 MD NM VA ME MN MI NV PA WI AZ OH FL TX MT WV
Source: FiveThirtyEight, RealClearPolitics, Goldman Sachs Global Investment Research
Prediction markets put the odds of a Republican sweep at 49%, up from around 45%
just before the debate and 41% a week ago. While the implied odds had already
increased noticeably prior to the debate, we would note that the odds of a Republican
sweep increased only modestly as a result of the debate, while the odds of a Trump
divided government scenario increased slightly more.
Compared to the period just before the debate, the overall odds of one-party control
actually declined slightly, which is intuitive. To the extent that the presidential outcome
reflects idiosyncratic factors rather than broader sentiment toward political parties, this
should affect presidential probabilities more than congressional.
Exhibit 9: Election Scenario Odds Shifted Pre- and Post-Debate
Percent The Shift in Prediction Market-Implied Election Scenario Odds Percent

60 60
Republican
_
D Senate, R House D Senate, R House

Sweep D Senate, D House R Senate, R House
50 R Senate, D House R Senate, D House 50
40 40
Trump Biden Democratic
30 Divided Divided Sweep 30
49
45 1 1
20 41 1 1 20
6
1 1 5 1
1 1
4 21
10 19 20 10
14 14 16 14 14
10
0 0
7/1
7/1
7/1
7/1
6/24
6/27
6/24
6/27
6/24
6/27
6/24
6/27
Odds shown for June 27 are pre-debate. Probabilities are normalized to sum to 100.
Source: Polymarket, Goldman Sachs Global Investment Research
1 July 2024 9
What Does All This Mean for the Relative Probabilities of Post-Election
Policies?
If presidential election probabilities shift more than congressional probabilities, the effect
on policy expectations should be concentrated in areas where a potential Trump
administration might focus its executive actions, and less in areas that would also
require Congress. Shifting expectations should also lower the odds of changes that
might occur under a Democratic sweep (i.e., changes that require Congress but that
would only occur under Democratic majorities).
The former category includes tariff hikes, immigration restrictions, and an easier
environment for regulated industries, including but not limited to antitrust. However, it
would not include things like full extension of the expiring tax cuts or the rollback of
green subsidies under the Inflation Reduction Act, which require congressional approval
and which Democrats would likely block absent a Republican sweep.
The latter category of items that would be unlikely, absent a Democratic sweep, mainly
involve tax hikes on corporate income and high-earning individuals that would go beyond
the expiration of the 2017 tax cuts. Most of the revenue would fund new social benefits,
rather than the types of capital investment that was the focus of the IRA, CHIPS Act,
and infrastructure legislation in 2021-2022.
How Have Markets Reacted to the Change in Election Probabilities?

Markets generally reacted as expected to shifting probabilities of the outcome, with
moves higher in equity futures, Treasury yields, and the dollar (see our Global Markets
Research colleagues’ note here for more detail on the market reaction). While the
moves were generally modest, the relative magnitudes are intuitive.
For example, the 10yr Treasury yield rose 1bp on a rise of 6pp in the implied probability
of a Republican presidential win (to 58%), implying a move of 7bps in the event of a
Trump win. A potential explanation for the modest move is that, as noted above, the
fiscal policy implications of a shift in presidential probabilities alone are less clear cut, as
_
control of Congress is at least as important in this area.
Exhibit 10: Equities and Yields Increased; Energy, Financials, and Real Estate Rose While Consumer Discretionary and Renewables Fell
Percent Basis points Percent Sector Price Changes Relative to the S&P 500 Percent
1.0 Asset Price Changes During the Debate 5.0 1.5 1.5
Following the Debate (Thursday Close to Friday Close)
From 9:00-9:45pm ET
1.0 1.0
0.8 Percent (left) Basis points (right) 4.0 0.5 0.5
0.0 0.0
0.6 3.0 -0.5 -0.5
-1.0 -1.0
0.4 2.0 -1.5 -1.5
-2.0 -2.0
0.2 1.0 -2.5 -2.5
-3.0 -3.0
Consumer Disc.
Health Care
Energy
Comms Services
Financials
Consumer Staples
Tech
Materials
Renewables
Industrials
Utilities
Real Estate
0.0 0.0
USD TWI
US 10Y
US 2Y
S&P 500
Oil
Source: Bloomberg, Goldman Sachs Global Investment Research
1 July 2024 10
S&P 500 futures rose 0.17% over the course of the debate, implying a modest move of
1.2% in the event of a Trump win. More interestingly, sectors that might benefit from an
easier regulatory environment generally saw relative strength at the open of trading
following the debate, which in most cases persisted until the close on June 28.
Consumer discretionary, which would face higher tariffs under a Trump administration,
and renewables, which could be at risk of losing IRA subsidies, both declined.
What Are the Implications of All of This Election Uncertainty?

In the past, we have found that policy uncertainty rises in election years and that policy
uncertainty has a dampening effect on economic activity and sentiment. That said, while
survey-based indicators like the ISM manufacturing index and consumer confidence
have on average weakened ahead of presidential elections, there is no statistically
significant evidence that proximity to a presidential election weighs on growth.
Exhibit 11: Survey-Based Indicators Tend to Weaken Ahead of Presidential Elections
Index Index
102 Consumer and Business Sentiment in 58
Election Years, 1960-2020
101 57
100
56
99
98 55
97 54
96 53
95
52
94
U. Mich Consumer Survey, Current Conditions (left) 51
93
ISM Manufacturing Index (right)
92 50
-18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3
_
Source: University of Michigan, Institute for Supply Management, Goldman Sachs Global Investment Research
Exhibit 12 shows the Economic Policy Uncertainty Index ahead of presidential elections,
adjusted for economic conditions by regressing it on lags in the unemployment rate.
Even with that adjustment, excluding 2008 and 2020 still reduces the average level of
the uncertainty index. Either way, policy uncertainty has generally been running above
those levels and the historical pattern suggests it is likely to rise further over the next
several months to the election, as do recent events.
1 July 2024 11
Exhibit 12: Election-Related Uncertainty Has Already Been Higher This Year Than Usual
Index Index
Policy Uncertainty Index Adjusted for Economic
40 40
Conditions Around Presidential Elections
30 30
20 20
10 10
0 0
-10 -10
-20 -20
2024 1988-2020 Excluding 2008 and 2020
-30 -30
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Source: policyuncertainty.com, Goldman Sachs Global Investment Research
Policy uncertainty weighs on economic activity. As shown in Exhibit 13, the greatest
effects of heightened policy uncertainty are in business investment, where firms might
delay marginal investments while awaiting clarity on the election outlook. Consumption
is generally less affected apart from durable goods consumption.
Exhibit 13: Policy Uncertainty Weighs on Real GDP Growth

0.0 0.0
-0.2 -0.2
-0.4 -0.4
-0.6 -0.6
-0.8 -0.8
_
-1.0 -1.0
-1.2
1985-2019 -1.2
1985-2023
-1.4 -1.4
-1.6 -1.6
-1.8 Estimated effect of a 10-point increase in the Economic Policy Uncertainty Index on real growth in GDP -1.8
components in the following quarter (qoq, ann.)
-2.0 -2.0
Durable Goods Nondurable Services Nonresidential Equipment IP Investment* Residential Real GDP*
Consumption* Goods Consumption* Structures Investment* Investment
Consumption* Investment*
* Indicates significance at the 5% level
Source: Department of Commerce, policyuncertainty.com, Goldman Sachs Global Investment Research
But is there more or less uncertainty regarding the presidential election since the
debate? While the implied odds are farther from even than they had been—i.e., the
outcome looks slightly more certain—uncertainty has increased in two other ways.
First, there is a higher probability than before that a different candidate could represent
Democrats in November. As noted earlier, the fact that President Biden’s polling
1 July 2024 12
deficit—he has trailed since the start of the year—was so consistent made it less likely
to change over the remainder of the campaign. While there had been no obvious
catalyst on the horizon to “shake up” the race, the potential reopening of the
nomination could do this.
Second, major policy changes look more likely than before but, in some cases—tariff
policy under a potential Trump administration, for example—there is substantial
uncertainty regarding how far those changes would go. So while prediction markets
imply somewhat less uncertainty regarding the election outcome as the race stands
today, multiple sources of uncertainty remain.
Alec Phillips
Tim Krupa
_
1 July 2024 13
The US Economic and Financial Outlook

THE US ECONOMIC AND FINANCIAL OUTLOOK
(% change on previous period, annualized, except where noted)
2022 2023 2024 2025 2026 2027 2023 2024
(f) (f) (f) (f) (f) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
OUTPUT AND SPENDING
Real GDP 1.9 2.5 2.6 2.2 2.0 2.0 2.2 2.1 4.9 3.4 1.4 1.9 2.7 2.5
Real GDP (annual=Q4/Q4, quarterly=yoy) 0.7 3.1 2.1 2.0 1.9 2.0 1.7 2.4 2.9 3.1 2.9 2.9 2.4 2.1
Consumer Expenditures 2.5 2.2 2.1 2.2 2.0 2.0 3.8 0.8 3.1 3.3 1.5 1.4 2.5 2.5
Residential Fixed Investment -9.0 -10.6 3.9 0.5 2.8 2.4 -5.3 -2.2 6.7 2.8 16.0 -3.0 -4.0 0.0
Business Fixed Investment 5.2 4.5 3.9 3.8 3.8 3.7 5.7 7.4 1.5 3.8 4.4 4.2 3.2 3.7
Structures -2.1 13.2 4.0 -0.4 2.9 3.0 30.3 16.1 11.2 10.9 3.4 -3.0 -2.0 -3.0
Equipment 5.2 -0.3 3.0 6.0 3.8 3.2 -4.1 7.7 -4.4 -1.1 1.6 9.8 5.5 7.0
Intellectual Property Products 9.1 4.5 4.6 4.1 4.3 4.5 3.8 2.7 1.8 4.3 7.7 3.5 4.3 4.5
Federal Government -2.8 4.2 1.4 0.0 0.0 0.0 5.2 1.1 7.1 2.4 -0.2 0.5 0.0 0.0
State & Local Government 0.2 4.0 3.5 1.1 1.0 1.0 4.6 4.7 5.0 6.0 3.0 2.7 1.0 1.0
Net Exports ($bn, '17) -1,051 -928 -982 -994 -1,010 -1,002 -935 -928 -931 -919 -960 -1,024 -977 -968
Inventory Investment ($bn, '17) 128 44 75 80 60 60 27 15 78 55 29 97 87 87
Nominal GDP 9.1 6.3 5.1 4.3 3.9 4.1 6.3 3.8 8.3 5.1 4.5 4.8 4.4 4.3
Industrial Production, Mfg. 2.7 -0.5 0.7 3.5 3.3 3.3 0.3 0.0 -0.5 -1.5 -0.5 2.9 3.3 3.8
HOUSING MARKET
Housing Starts (units, thous) 1,552 1,421 1,384 1,453 1,529 1,545 1,369 1,455 1,380 1,481 1,407 1,382 1,369 1,377
New Home Sales (units, thous) 637 666 687 768 776 810 636 698 682 646 664 662 692 730
Existing Home Sales (units, thous) 5,087 4,101 4,084 4,237 4,290 4,546 4,317 4,187 4,020 3,880 4,200 4,055 3,997 4,084
Case-Shiller Home Prices (%yoy)* 7.5 5.1 3.8 4.4 4.9 4.9 2.3 -0.2 2.5 5.1 6.4 5.8 4.3 3.8
INFLATION (% ch, yr/yr)

Consumer Price Index (CPI)** 6.4 3.3 2.9 2.5 2.3 2.2 5.7 4.0 3.6 3.2 3.2 3.3 2.9 2.9
Core CPI ** 5.7 3.9 3.3 2.7 2.3 2.3 5.5 5.2 4.4 4.0 3.8 3.5 3.5 3.4
Core PCE** † 4.9 2.9 2.7 2.1 2.0 2.0 4.8 4.6 3.8 3.2 2.9 2.7 2.7 2.7
LABOR MARKET
Unemployment Rate (%)^ 3.5 3.7 4.0 4.0 4.0 4.0 3.5 3.6 3.8 3.7 3.8 4.2 4.1 4.0
U6 Underemployment Rate (%)^ 6.5 7.1 7.4 7.4 7.4 7.4 6.7 6.9 7.0 7.1 7.3 7.9 7.6 7.4
Payrolls (thous, monthly rate) 377 251 201 100 75 75 305 274 213 212 267 187 175 175
Employment-Population Ratio (%)^ 60.1 60.1 60.0 59.8 59.6 59.4 60.4 60.3 60.4 60.1 60.3 59.9 59.9 60.0
Labor Force Participation Rate (%)^ 62.3 62.5 62.5 62.3 62.1 61.9 62.6 62.6 62.8 62.5 62.7 62.5 62.5 62.5
Average Hourly Earnings (%yoy) 5.4 4.5 3.9 3.4 3.2 3.2 4.6 4.6 4.5 4.3 4.2 4.0 3.8 3.7
GOVERNMENT FINANCE
Federal Budget (FY, $bn) -1,376 -1,695 -1,800 -1,900 -1,900 -2,050 -- -- -- -- -- -- -- --
FINANCIAL INDICATORS
FF Target Range (Bottom-Top, %)^ 4.25-4.5 5.25-5.5 4.75-5 3.75-4 3.25-3.5 3.25-3.5 4.75-5 5-5.25 5.25-5.5 5.25-5.5 5.25-5.5 5.25-5.5 5-5.25 4.75-5
10-Year Treasury Note^ 3.88 3.88 4.25 4.10 4.10 4.10 3.48 3.81 4.59 3.88 4.20 4.30 4.25 4.25
Euro (€/$)^ 1.07 1.11 1.05 1.15 1.15 1.15 1.09 1.09 1.06 1.11 1.08 1.07 1.05 1.05
Yen ($/¥)^ 132 141 155 130 125 120 133 144 149 141 151 159 155 155
* Weighted average of metro-level HPIs for 381 metro cities where the weights are dollar values of housing stock reported in the American Community Survey. Annual numbers are Q4/Q4.
** Annual inflation numbers are December year-on-year values. Quarterly values are Q4/Q4.
† PCE = Personal consumption expenditures. ^ Denotes end of period.
Note: Published figures in bold.
Source: Goldman Sachs Global Investment Research.
Source: Goldman Sachs Global Investment Research

_
1 July 2024 14
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1 July 2024 17

US Economics Analyst_ Election 2024_ Even More Uncertain (Phillips_Krupa)(1)(1)

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US Economics Analyst_ Election 2024_ Even More Uncertain (Phillips_Krupa)(1)(1)

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Election 2024: Even More Uncertain (Phillips/Krupa)

Election 2024: Even More Uncertain

-10 -10 -40 -40

Percentage points Percentage points Percentage points Percentage points

-10 -10 -10 -10

-20 -20 -20 -20

-30 -30 -30 -30

-40 -40 -40 -40

Presidential approval tells a similar story. As shown in Exhibit 2, President Biden’s

Percentage points Percentage points Percentage points Percentage points

Source: FiveThirtyEight, Goldman Sachs Global Investment Research

How Has Thursday’s Presidential Debate Affected the Race?

Exhibit 3: Incumbents Tend to Underperform in the First Debate

Percentage points Percentage points

-60 Net %, Incumbent Won Debate (left) -6

-80 Change in Poll Margin, Incumbent (right) -8

Exhibit 4: Post-Debate National Polls Advantage Trump

Percentage points Percentage points

Source: RealClearPolitics, Goldman Sachs Global Investment Research

track fairly closely with moves in the national polls.

Percentage points Percentage points

Source: RealClearPolitics, Goldman Sachs Global Investment Research

Will President Biden Be on the Ballot in November?

Source: PredictIt, Bloomberg, Goldman Sachs Global Investment Research

What if President Biden Were No Longer in the Race?

Percent Percent Percent Percent

What Implications Does Turbulence in the Presidential Contest Have for

Exhibit 8: Congressional Democrats Are Polling Stronger Than President Biden

Percent Percent Percentage points Percentage points

10 safe D seats up 9 safe R seats up

Source: FiveThirtyEight, RealClearPolitics, Goldman Sachs Global Investment Research

Exhibit 9: Election Scenario Odds Shifted Pre- and Post-Debate

Percent The Shift in Prediction Market-Implied Election Scenario Odds Percent

D Senate, R House D Senate, R House

Source: Polymarket, Goldman Sachs Global Investment Research

How Have Markets Reacted to the Change in Election Probabilities?

control of Congress is at least as important in this area.

Source: Bloomberg, Goldman Sachs Global Investment Research

What Are the Implications of All of This Election Uncertainty?

Exhibit 11: Survey-Based Indicators Tend to Weaken Ahead of Presidential Elections

Source: policyuncertainty.com, Goldman Sachs Global Investment Research

Exhibit 13: Policy Uncertainty Weighs on Real GDP Growth

Percentage points Percentage points

Source: Department of Commerce, policyuncertainty.com, Goldman Sachs Global Investment Research

The US Economic and Financial Outlook

INFLATION (% ch, yr/yr)

Source: Goldman Sachs Global Investment Research

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