What investors should know about inflation under Harris or Trump

On the latest episode of Capitol Gains, Raymond James Managing Director Ed Mills joins Yahoo Finance's Rachelle Akuffo, Washington Correspondent Ben Werschkul, and Senior Columnist Rick Newman to give insight into the probability of a Democratic or Republican sweep during the 2024 election and what either of those scenarios would mean for economic policy and inflation.

According to Mills, a Republican sweep could impact key Biden administration policies, including the Inflation Reduction Act. The corporate tax rate could go up after a Democratic sweep.

He also considers which party's policies would cause higher inflation. "I think the knee-jerk reaction for a lot of folks has been Democrats, especially because we've had inflation during the Biden administration," he says, noting that Democratic policies could cause a second wave of inflation. Yet Mills also says, "but as I look at some of what Trump is proposing from, you know, tariffs to kind of higher deficits, to stricter immigration, those are all inflationary pressure."

Listen to the full episode of Capitol Gains here.

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This post was written by Meredith Lawrence.

Video Transcript

Yeah.

So for investors, uh what we've been telling folks at Raymond James since the beginning of the year is that as we game out some of the probabilities, um when you add up the percentage probability of a Republican sweep and a democratic sweep, uh that's the most likely outcome that has a greater than 50% chance.

And when there is a sweep by either party that unlocks what we call reconciliation and it's kind of boring to talk about reconciliation.

It just happens to be what we've made all of the major policy changes, our government in the last 30 years and we look ahead and say, all right, if there is uh reconciliation under a Republican sweep, what does that mean for the extension of the tax cuts?

Uh the Inflation Reduction Act, the signature achievement of the Biden administration is that under threat?

Are there going to be impacts to industrial stocks?

Is there going to be impact to clean energy stocks if there were to be a democratic sweep?

Is that corporate tax rate going up?

Is that going to impact uh some of the companies that are that top rate payer?

Um And another really important kind of conversation coming out of this is, you know, which policies would be more inflationary.

I think the knee jerk reaction for a lot of folks has been um Democrats, especially because we've had inflation during the Biden administration and a lot of fiscal stimulus uh could continue policies that could bring about a second wave of inflation.

But as I look at some of what Trump is proposing from, you know, tariffs to kind of higher deficits to stricter immigration.

Those are all inflationary pressure.

So there's a lot of conversation as to those fiscal policies, how that could impact monetary policy?

And is it an easier path ahead if the fed has a Harris presidency versus a Trump presidency or because especially if they try to wait to understand exactly what a President Trump would do on a number of those policies that he's proposed on the campaign trail.