Economists say uncertainty about the outcome of the upcoming presidential election may be hurting the U.S. economy. With the election just two months away, analysts warn that some employers may be more reluctant to hire until they have a clearer picture of the country's economic direction.
New employment numbers suggest hiring momentum slowed in August, with employers adding only 155,000 workers to their payrolls. That's a far cry from the previous two months, which saw an average gain of about 270,000 new jobs. Even with the national unemployment rate now under 5 percent — something most economists consider full employment — wages have remained flat.
A new survey by the National Association for Business Economists suggests some companies are being cautious about making any big moves. NABE spokesman LaVaughn Henry said the simple explanation is that business loves certainty. And in a divisive election season with no clear outcome, Henry, a former member of the Federal Reserve Bank of Cleveland, said questions about future policy are enough to give some companies heartburn.
"They like to be able to project forward: 'What will be my taxes next year? What will be the regulations I may be facing the following few years?' Without a candidate elected and implementing policy at a given point in time, you have increased uncertainty," Henry said.
Analysts agree some businesses tend to be skittish in an election year. There's a caveat, though, noted Bankrate senior analyst Mark Hamrick.
"I have a hard time believing that if one were an employer and they are seeing sufficient demand for products or services, that they would hold off on adding resources or workers to meet that demand simply because an election is looming," said Hamrick.
Details lacking
Budget experts say part of the problem in this election season is that both candidates are spending too much time making campaign promises without showing a detailed plan on how to pay for them. Asked to grade the major candidates, the Committee for a Responsible Federal Budget said neither Hillary Clinton's nor Donald Trump's policies address what it sees as the nation's most important economic issues.
On issues such as the national debt, income inequality and entitlement spending, CRFB President Maya MacGuineas gave both campaigns failing grades.
"It's certainly a situation of where we're stuck grading on a curve, because nobody's anywhere close to an 'A' — barely anybody would pass, frankly, the tests we would have — for fiscal policy," said MacGuineas.
Despite the absence of specifics in the major parties' dueling economic platforms, NABE's latest survey suggested Clinton was the preferred choice among business economists. Of 414 business economists who took part in a NABE survey in late July, only 14 percent thought Trump had a realistic plan to fix the economy, compared with 55 percent who said Clinton would do a better job of managing the world's largest economy.
Libertarian candidate Gary Johnson did better than Trump with 15.3 percent. Another 15.3 percent of those surveyed had no opinion.
Another survey on business attitudes found opinions split along gender lines. Bank of America National Sales Executive Sharon Miller said election uncertainty might indeed be causing some businesses to hedge their bets until November.
Recovery progression
But Miller added, "When you look at some of the issues that are being discussed during the election, like minimum wage, we did find that women business owners were much more in favor of raising the minimum wage and thought that it would have a positive impact on the economy versus the men that we surveyed."
Despite the increased caution among some business owners, Bankrate's Hamrick has full confidence in the U.S. recovery.
"We've seen roughly 200,000 jobs added to the economy on a monthly basis for many months now. I don't think that's going to change anytime soon," said Hamrick.
Regardless of who wins in November, however, NABE's Henry said the damage already may be apparent in the latest U.S. growth figures, which show the economy growing at a tepid annual rate of 1.1 percent.
