Goldman Sachs Sees a 50% Chance of a Government Shutdown

White House
iStock.com/Willard

Analysts at Goldman Sachs Group Inc (NYSE:GS) are seeing a 50% probability of a brief government shutdown in the coming days.

Goldman Sachs forecasts that the declining popularity of current U.S. President Donald Trump could trigger a government shutdown, forcing the President to step down.

According to the banking group, presidential approval ratings are a good metric to forecast the probability of mid-term elections. The bank’s economic research group identifies that Trump’s presidential approval amongst the general public is the lowest that any U.S. president has ever witnessed in his first year in the Oval Office.

Goldman Sachs points out that, in the past, similar instances of growing disapproval of a president have led to the president leaving the office.

Goldman Sachs finds it unusual that the president garnered such low approval at a time when the economy appears to be expanding under his administration. The general public is turning against him, while key economic and financial indicators like employment, GDP, income, stock market indices, and overall consumer confidence are all showing positive strength.

According to the group, Trump’s low approval ratings pose “legislative risks,” as the President continues to take “controversial positions.”

President Trump’s ostensibly questionable stances on political and social issues are no secret. The President’s controversial policies on healthcare, environmental regulation, gun regulation, drug policy, and immigration have all garnered resistance not only from the American people, but also from officials within his government.

On the contrary, Goldman Sachs sees a substantial gain in the approval ratings of Democrats, who may now be in a good position to gain a majority control over the House in the event of mid-term elections.

In addition, the research group also forecasts that although Trump’s tax cuts may go into effect, they may not be as high as the president has been proposing.

Trump’s proposed tax cuts are attracting a lot of criticism. The president is proposing to slash corporate taxes, as well as eliminate estate taxes. His proposed tax policy evidently favors the rich, ultimately being unfavorable to poor Americans.

The group says that very little progress has been made so far for the proposed tax legislation, which hints that more fiscal deadlines may be missed in the coming weeks.

 

Sources

Twitter post,” Michael S. Derby Twitter account, August 18, 2017, 2:08 p.m.

Categories: Government Shutdown, News

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