Goldman Sachs Forecasts Higher Economic Growth With Kamala Harris

Economists at Goldman Sachs Group Inc. have projected contrasting economic outcomes depending on whether Donald Trump or Kamala Harris wins the upcoming 2024 election. Their analysis suggests that U.S. GDP could face a significant downturn under a Trump administration, while a Harris victory might lead to moderate economic growth. The report highlights how each candidate’s policies could shape the country’s economic trajectory, according to Fortune.

Goldman’s economists, led by Alec Phillips, emphasized that a Trump victory could lead to economic challenges. They estimated that GDP could take a hit of up to 0.5 percentage points in the second half of 2025. This downturn would primarily result from Trump’s proposed tariffs and tighter immigration policies, which, according to the report, would overshadow any benefits from maintaining existing tax cuts. The team assumed that Trump would impose a 20 percentage-point tariff hike on China, along with increased duties on auto imports from Mexico and the European Union. A reduction in immigration, which could slow labor force growth, was also factored into their calculations.

On the other hand, the Goldman Sachs team predicted a different economic outcome if Kamala Harris wins the presidency, especially if Democrats also gain control of Congress. They suggested that new spending initiatives and expanded middle-income tax credits under Harris could slightly boost GDP growth, despite potential increases in corporate tax rates.

Immigration and Labor Force Growth

Goldman Sachs also analyzed the potential effects of immigration policies under each administration. They expect a Harris administration to continue with a moderate approach, resulting in a slowdown in new arrivals to about 1.5 million annually—higher than the pre-pandemic average of 1 million. In contrast, a Trump administration could lead to a sharper decrease in immigration, potentially reducing new arrivals to 1.25 million, or as low as 750,000 per year if Republicans gain control of Congress and increase enforcement resources.

The economists underscored the importance of immigration as a driver of employment growth in the U.S. economy. They estimated that under a Harris administration, immigration could contribute 10,000 more jobs per month to labor force growth compared to a Trump administration with divided government. The difference would be even more pronounced if Republicans won both the White House and Congress, with an estimated 30,000 additional jobs per month under Harris.

Trade Policies and Inflationary Risks

In terms of trade policy, Goldman Sachs does not anticipate further tariff hikes under a Harris presidency. However, they warned that Trump’s proposed tariffs on China, the European Union, and Mexico could lead to inflationary pressures, potentially increasing the Federal Reserve’s preferred price gauge by 30 to 40 basis points. Trump has also floated the idea of a universal 10% tariff, which could have an even greater impact on inflation, though it would take longer to materialize.

The report from Goldman Sachs adds another dimension to the ongoing debates surrounding the 2024 election, highlighting how different policy approaches could impact the U.S. economy in the coming years.