Washington
CNN
—

A thick fog obscuring the US economy may soon clear.

For months, U.S. consumers and businesses have felt it a certain degree of paralysis from the upcoming presidential election, delaying purchases and investments until the world knows who will move into the White House, according to surveys and comments from corporate executives.

Vice President Kamala Harris and former President Donald Trump both offer economic agendas that generally aim to improve affordability and strengthen the economy, but each has totally different approaches — which would have different effects on taxes and inflation. But businesses may not get immediate clarity on the direction of America’s economic policy, polls show a close racewhich could mean it will take some time to determine who the next president will be.

One bit of clarity they’re sure to get: the Federal Reserve’s latest interest rate decision, due Thursday.

The Fed cut borrowing costs in September for the first time in more than four years, while signaling further interest rate cuts. But a number of economic numbers have been released since the decision, which is important because the Fed’s decision is guided by what those numbers show. Chairman Jerome Powell’s remarks at a news conference after Thursday’s meeting could shed some light on whether Fed officials’ earlier expectations about the pace of rate cuts continue to hold.

Don’t expect to get an answer to all the lingering uncertainties this week. Still, America’s wait-and-see attitude could at least begin to thaw.

Because the outcome of the election will set the course of the economy for years to come, it may be prudent to postpone critical decisions such as expanding a business or buying a home until after the fact.

Trump’s economic vision demands drastic changessuch as mass deportations and high overall tariffs, while the Harris agenda proposes more measured solutions, such as restoring an expired expansion of the child tax credit and increasing a tax deduction for start-up expenses.

While the bottom line for both candidates is to provide everyday Americans and businesses with some relief, a survey of economists by The Wall Street Journal found that more than two-thirds (68%) of respondents believe that prices it would grow faster under Trump’s plan than Harris’s. The high tariffs are a key part of Trump’s economic plan and threaten to raise costs for businesses because higher tariffs are paid by US importers, not foreign countries, as Trump claims. This would also lead to faster consumer inflation.

A recent quarterly survey of CFOs of small and large companies in industries by two regional Federal Reserve Banks and Duke University found that nearly a third of respondents said they had “put off,” “reduced,” “indefinitely delayed” or “cancelled permanently”. ” their short-term and long-term investment plans this year due to uncertainty about the outcome of the election.

“Uncertainty about the outcome of the upcoming election has led to the preparation of more risk analysis studies,” said one transportation equipment manufacturer in the Institute for Supply Management’s latest survey of manufacturers, released Friday.

Consumers are also hesitant to make major purchase decisions, such as a home.

Election uncertainty may be one reason that sales of previously owned homes have been so slow in recent months, said Lawrence Yun, chief economist for the National Association of Realtors.

“Maybe people are just waiting to see what the election results will be before making a major decision like buying or selling homes,” Yun said in a recent call with reporters. “Maybe after the election we’ll see some robust gains.”

The world is also watching closely to see if US interest rates are headed lower. That seems to be the case at the moment.

The latest government employment figures released on Friday showed the labor market it cools down orderlywithout falling off a cliff, when removing the temporary effects of recent labor strikes and natural disasters on data.

Fed officials have said in recent speeches that they are committed to keeping the labor market intact and believe that interest rates are still at restrictively high levels. So, since the labor market isn’t heating up again after better-than-expected job growth numbers for September, that means another rate cut is on track to roll out this week. Investors are betting with near certainty that the Fed will offer a quarter-point cut, according to futures.

Lower rates could entice homebuyers to come off the fringes, and for businesses, plans that “covered” lower rates could continue. Now it’s just a matter of waiting for lower rates to appear.