The economy has been on a positive trajectory for months since hitting the depths of the COVID-19 pandemic last spring, culminating with record GDP growth in the third quarter. But with parts of the country still in economic restrictions or shutdowns due to the pandemic, and a contentious presidential election still playing out, there remains much uncertainty about whether the economy continues its positive momentum.
It appears control of Congress will remain divided, with Republicans retaining control of the Senate and Democrats holding the House. That means, regardless of whether Donald Trump or Joe Biden ultimately is declared the winner of the presidency, the gridlock that has marked Capitol Hill the last two years will likely continue. Garrett Watson, policy analyst at the Tax Foundation, says that means Republicans and Democrats will have to find some common ground. "There will have to be a prioritization on compromise," he tells KTRH. "To come to a mutual understanding on what makes the most sense to provide relief for Americans, and how do we get growth moving forward."
It appears that message is already resonating on Capitol Hill. One day after Election Day, Sen. Majority Leader Mitch McConnell (R-KY) said he wants to see a new economic stimulus package passed by the end of the year. Watson believes that's a good start. "Every month that we still have higher than normal unemployment and lower than normal economic growth is another month where it may take longer for us to get out of this," he says. "That is why it's so important to emphasize a v-shaped recovery."
The other impact of a divided Congress is less cooperation with whichever party controls the White House. Watson predicts that could mean more unilateral action from the president. "We saw this with President Trump and his extending of unemployment and his payroll tax deferrals," says Watson. "There will be temptation by either a Trump or Biden administration to do that if they can't get agreement."
The most important thing for the new Congress and whomever is in the White House is to keep the current economic momentum going. "How do we get on the path to get where we were before (tha pandemic)," says Watson. "So that we aren't stuck in what's been called the '90% economy," where we have a lot of things open, but we're not back to that normal that we all are hoping for."