Investing.com -- In a Monday report, investment bank Raymond James delved into potential policy actions that could influence the markets in 2025, irrespective of who wins the upcoming US presidential election.
The firm predicts strong fiscal tailwinds, reduced regulatory measures, energy permitting reform, and continued tech restrictions as some of the key factors that will likely occur regardless of the election's outcome.
The report indicates that a significant portion of funding from the Biden era for infrastructure, semiconductor production, and energy transition is still unspent, with more than 75% of the allocated funds available through the end of September.
Tax credits under the Inflation Reduction Act (IRA) are also largely untapped, with around eight years left to utilize them. Raymond James estimates these represent over $800 billion in appropriated funds and more than $500 billion in tax credits yet to impact the U.S. economy.
“There may be attempts to repeal portions of the IRA in a Trump victory, but we remain skeptical,” analysts led by Ed Mills said in the report. “Overall, we expect to see a strong fiscal tailwind to the economy regardless of the outcome of the election.”
Energy permitting reform is also on the horizon, with bipartisan support and increasing energy demands from the AI industry providing impetus for legislative change.
Raymond James is closely monitoring the debt limit debate in 2025, which could serve as a legislative vehicle for passing energy permitting reforms. Moreover, recent Supreme Court decisions are expected to streamline environmental reviews under the National Environmental Policy Act, expediting the permitting process.
The report further suggests that four years from now, there will be less regulation across industries due to the Supreme Court's recent rulings.
Decisions such as the overturning of the " Chevron (NYSE:CVX) deference" and the establishment of the "major questions" doctrine will curb the expansion of regulatory power, according to the report.
“The case that has re-opened the statute of limitation on all regulations will be the avenue to strike existing rules. This will take time, but will be a benefit to heavily-regulated industries,” analysts noted.
Meanwhile, support for critical minerals is anticipated to grow, with a focus on reshoring supply chains and securing domestic production of minerals vital for national security. While this initiative is still developing, it may gain similar backing as the semiconductor industry has received from Washington, D.C.
Another bipartisan issue, tech restrictions, particularly concerning sales to China, are expected to continue.
Analysts note that a Trump administration might pose more risks to the sale of legacy technology, whereas a Harris administration would likely maintain a steady tightening of these restrictions.
Regarding geopolitical risks, Raymond James expects U.S. and NATO defense budgets to rise, regardless of who wins the election. The firm anticipates that global threats will necessitate robust defense spending, whether under a Trump or Harris administration.
Lastly, the looming fiscal challenges, including the debt limit and the expiration of the individual provisions of the 2017 tax law, are set to dominate the agenda in 2025.
Raymond James projects that, following the passage of a tax package, there is a high likelihood of an increased child tax credit and the reinstatement of the R&D tax credit and bonus depreciation, independent of the electoral results.
“We expect the debt limit to be raised, but will be looking for its impact on U.S. Treasuries,” the report concluded.