So the stakes are drawn, Hillary vs. The Donald.
What will the Obama Administration do to ensure a Clinton win?
Well first the White House needs to guarantee we do not fall into a recession. The numbers are razor-thin for Q1. A 0.5% growth number, which will be revised at the end of this month could fall into negative territory, since some of the numbers they guessed at for the first reading are start coming in not as rosy as once thought.
Business inventories and commitments to orders can be fudged on first blush, but when the actual data comes in, we could be in a contraction (which is a $10 way of saying negative growth).
So look for comments from the administration on stimulus or tax cuts. Another way of saying this is “helicopter money” given directly to the people and bypassing the banks, unlike QE.
Vote buying could be another name for it.
Anyway this stimulus rhetoric will be ramped up as we get closer to the end of the month. The reason is two-fold:
- It takes time for this money to work its way into Q2 readings. Since this “gift” needs to have an effect before the end of June and it has to be spent on new items.
- The tax break or stimulus needs to be significant because just paying off credit card balances doesn’t help GDP, so the cash-back plan from Uncle Sam has to be large enough to make people feel flush and spend it.
This is what the early summer leading up to the conventions will be like. Obama saving his legacy and trying to pass it along to Hillary using helicopter money.
No two-ways about it. If you are planning to make a large purchase ie appliance, car or home, wait a bit. “Attractive financing terms will be available,” as the hucksters on TV say.