The U.S. economy is operating mostly smoothly, but that could change depending on what happens in Tuesday’s election, especially if the outcome isn’t immediately clear.

Close elections pose a number of risks to the health of the economy, starting with the possibility of a prolonged election or a contested vote count. Late polls have shown the presidential race is a matchup between Vice President Kamala Harris and former President Donald Trump in battleground states that will determine the winner. The closer the election gets, the greater the chance that the result will be called into question, which could disrupt the economy in the days to come.

“It could take days, if not weeks, to determine the winner. Social unrest in such circumstances would not be surprising,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a commentary. “This would be difficult for the already fragile collective psyche to bear, undermining investor, business and consumer confidence. There are only downsides for the economy if the elections are close and controversial. »

Indeed, the Associated Press did not announce the outcome of the 2020 election until the Saturday after Election Day. The outcome could take even longer this time, especially if it comes to Pennsylvania, where election officials are not allowed to start counting mail-in ballots until after Election Day.

Further disruption could occur in the event of a legal challenge to the results.

What are the issues

Voters placed the economy among their top concerns in this election.

In figures, the economy is in good health, with low unemployment ratea booming stock market, and solid economic growth. At the same time, a dysfunctional and unaffordable housing market tormented the economyand low-income households have had difficulty coping with the explosion of post-pandemic inflation despite overall wage increases. Although prices of most products have stopped rising rapidly, they have not returned to pre-pandemic levels and probably never will.

Whoever ultimately wins, a delay in deciding the election could disrupt financial markets and the economy as a whole. THE two candidates to have very different economic policies and investors generally hates uncertainty on future conditions. Uncertainty can lead to market volatility and sharp fluctuations in the prices of financial assets.

“It is rare for the economy to perform as exceptionally well as it is currently. But for it to continue this way, the presidential election and its results will have to proceed in a reasonably graceful manner,” he said. Zandi said. “It’s probably a good time to get started.”