Global Perspectives: Will 2019 Be the Year of Political Brinksmanship?
Weekly commentary on international finance and economics including global events and how world issues affect our domestic issues.
Will 2019 Be the Year of Political Brinksmanship?
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As we close out 2018 and look out towards 2019, it appears that next year could shape up to be a year of political brinksmanship, with the three main global risk factors being the U.S., China and Europe.
In the U.S., the midterm elections resulted in a divided congress, which could cause gridlock. Currently, the U.S. economy is on track for one of its best years since the end of the Great Recession. For this trend to continue, accelerated capital expenditure spending is needed, but gridlock might slow it down.
Capital spending tends to drop during times of uncertainty, and gridlock has historically raised political uncertainty. Case in point, in 2011 the U.S. lost its AAA rating after political brinksmanship over the debt ceiling brought the country close to a default. And with deep animosity between the two major political parties, the risk for escalating tensions to cause gridlock is high.
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