Fiscal stimulus package
The dire economic reality means that negotiating a fiscal stimulus package will be a main priority for Joe Biden after inaugation in January but getting any such stimulus package through congress will depend on the final composition of the senate where it is still unclear if the democratic party can secure a majority. This will be settled after senate re-elections in Georgia on 5 January, Mikel Milhøj explains.
”Georgia has traditionally voted republican, and it is unlikely to be easy for democrats to win both seats up for reelection, so there is a risk that we will see a continuation of the situation of the past 30 years with one party blocking the policy proposals of the other. A fiscal stimulus package could offer the economy a helping hand, which would be welcomed on the financial markets. With no new stimulus package there is a higher risk that the current pandemic induced recession leads to a recession in more traditional terms with huge income losses for the unemployed and with more companies going out of business”, says Mikael Milhøj.
Easing the trade conflict with China
A republican controlled senate will also make it difficult for Joe Biden to increase taxes and minimum wages and to secure funding for infrastructure investments or a green transition, but the president would have more executive power with regard to trade and foreign affairs. Mikael Milhøj expects relations between US and Europa to improve and that the trade conflict with China will be deescalated, although Biden has vowed to keep pressure on China. Improved relations with traditional allies could help him isolate China politically, says Mikael Milhøj.