With polls showing a close race between former President Donald Trump and Vice President Kamala Harris less than a week ahead of the US presidential election, Jefferies senior US economist Thomas Simons joins Julie Hyman and Brad Smith on Catalysts to discuss how the election could affect consumer spending. “The biggest read-through for the election results into consumer spending in the future really has more to do with taxes than sentiment because we are going to have this big rewrite of the tax code into 2026,” Simons tells Yahoo Finance. Worries around tax changes “could end up impacting consumer spending if the Democrats do well. And then there’s this concern that most of the Tax Cuts and Jobs Act is going to be reversed, or there’s going to be additional taxes on upper-income, wealthier households. They’ve been the ones that have been driving the overall spending numbers to this point,” he adds, explaining that “taking away some positive wealth effect… then there is a risk that consumer spending might slow.” The economist says consumer confidence is split down party lines. “We have seen essentially since 2016 that there is this sort of zig-zag seesaw pattern of when the Republicans are in office or are doing well in polls, the Republican sentiment goes to the moon, and Democrats go into the basement and literally vice versa.”
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