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Yetsenga: this is the US now

Counting in the US Election continues, with all eyes fixed firmly on the world’s largest economy for any signs of a result. At this stage, it appears Democratic challenger Joe Biden may get across the line, but nothing is yet certain.

For me, there are three immediate takeaways from the vote so far. One is the importance of a smooth transfer of power, should the incumbent indeed be ousted.

There have already been reports of legal challenges to some of the ongoing counting. What the situation requires is a sense the system is working effectively and the inauguration will go ahead as intended.

The second is the polls were wrong. Again. If you're having a bad day, consider you could be a pollster in the US, having spent four years telling people you fixed things after the errors of 2016. They hadn’t.

What is now clear is the 2016 vote in the US wasn't an accident. It's the way the US people view the world. We need to accept that this is the US, as of today – and it is divided.

The US is not the only country that's divided, but it's the world's largest economy. This vote, and its fallout, will have lasting geopolitical and economic implications around the globe.

Ongoing inequality looms large. Already exacerbated by the COVID-19 pandemic, inequality is something all economies - particularly Western ones - need to confront.

The final theme is the future. What do the next couple of years look like under a Biden presidency? The candidate spoke of increasing corporate taxes and unwinding personal income tax cuts, going strongly on climate and effectively mirroring current US President Donald Trump on China.

In large part, the last one is the only thing we can be really confident about. Biden will clearly attempt to address climate and try to alter the tax mix, particularly around high-wealth individuals and companies.

But given the fact we haven't seen a blue wave, it looks as if the US will have a Democratic President and a mix of power in Congress. Those elements make the policy program difficult.

The impacts of COVID-19 pandemic are receding and there is optimism for the economic recovery. But it’s hard to see a silver lining around geopolitics. Unfortunately, this election result only reinforces that.

Richard Yetsenga is Chief Economist at ANZ

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