World’s most accurate economist predicts US election outcomes

While predicting the future with absolute certainty is impossible, Christophe Barraud has established a remarkable track record in economic forecasting.

Since 2012, Bloomberg has recognized him as the top US forecaster every year except once, and he recently secured the top position for the third quarter of 2024, Caliber.Az reports, citing foreign media.

Barraud is closely analyzing its potential economic implications as the US election approaches. The race is tight, featuring two distinct candidates whose policies could lead to different economic landscapes. A crucial question beyond the identity of the next president is the extent of their power, as significant policy changes typically require a majority in Congress.

Barraud anticipates that US economic growth will pick up once the election results are announced, regardless of the victor. He attributes the current stagnation in growth to uncertainty, which has caused corporations to delay major capital expenditures and hiring. Additionally, disruptions such as union strikes and severe weather have dampened economic activity. He predicts that US GDP growth will exceed consensus estimates, forecasting a 2.7% growth rate for 2024 (up from an expected 2.6%) and 2.1% for 2025 (compared to the consensus of 1.8%).

Barraud outlines three potential election scenarios:

1. Kamala Harris wins with a divided Congress: Economic changes are unlikely, resulting in a status quo scenario.

2. Donald Trump wins with a divided Congress: This would restrict his ability to implement tax cuts, leading him to prioritize foreign policy. Such an outcome could negatively impact global growth, maintaining neutrality for US GDP in the short term, but potentially slowing it in the long run due to retaliatory measures from other nations.

3. Trump wins with a Republican sweep: Barraud considers this the most probable outcome. If Republicans gain control of the Senate and possibly the House, Trump would be able to enact tax cuts, which could enhance domestic growth and boost GDP by 2.1% to 2.3% in 2025. However, there are concerns about the US deficit ballooning under this scenario, particularly if tax cuts lead to revenue shortfalls.

Barraud projects that if Trump wins, the 10-year Treasury yield could initially spike to at least 4.5%, given current yields around 4.23%. Without a congressional majority, yields might increase by another 15 basis points to 4.35%. In the event of a Republican sweep, he anticipates a gradual rise to 5%, as investors seek a higher risk premium, especially if immigration cuts exacerbate inflation in a robust labour market.

Conversely, if Harris wins with a divided Congress, yields might decrease, as markets have already priced in a Republican victory, leading to a corrective drop.

What underpins Barraud’s confidence in his forecasts? He credits his methodology, which combines the latest economic, financial, and satellite data, identifies key signals through backtesting, and integrates inputs from various models to refine projections and highlight risks. In this election analysis, he also considers insights from poll-betting markets to enhance accuracy.