Some bank economists are revising their forecasts in anticipation of a Clinton victory on Nov. 3.
They generally expect higher interest rates and inflation, and a slight rise in the economic growth rate.
Perhaps most important for banks, the economists are predicting increased loan demand, especially in 1994 and beyond.
If the Democrats "manage to create a feeling that things will get better, you can get a buildup in consumer confidence and at least a short-term increase in loan demand," said Joel Naroff, Philadelphia-based chief economist for First Fidelity Bancorp., Lawrenceville, N.J.
Some economists also predict that a Clinton presidency would be likely to stop the Federal Reserve's monetary easing. They fear the stimulative fiscal policy proposed by Gov. Clinton, coupled with further cuts in interest rates, would overheat the economy.
Easing Called Doubtful
"I've been assuming that there's at least a 50-50 chance the Fed won't cut rates," said Gary L. Ciminero, chief economist of Fleet National Bank, Providence R.I. Now, he said, he was even more certain that there would be no further easing.
Added Frederick S. Breimeyer, economist at a Boston bank and president of the New England Economic Project, "The Fed is already taking a more cautions approach, and a fiscal package would give them more reason to go slow."
Funds Rate Is Revised
Christopher Low, an economist at Marine Midland Bank in New York, is projecting 2% growth in gross domestic product by the end of 1993, instead of the 1% to 1.5% he posted a few weeks ago.
He also has revised his late-1993 estimate for the federal funds rate, raising it to 2.75% from 2% and his 30-year bond yield, predicting almost 8% rather than 7%. Much of this change stems from the reaction in the bond markets to a probable Clinton victory.
David L. Littman, a senior economist at Comerica Inc. in Detroit said many business leaders have told him the outcome of the election will have a significant effect on their businesses.
"There are many concerned people in the business community who will be looking very closely at Clinton's fiscal policies, who say they may redirect capital offshore," he said.
A Gain in Confidence?
And while the macroeconomic impact of a Clinton presidency would have limited impact in the first year, economist predict more significant differences in the long term.
Nonetheless, there could be an emotional response to his victory that builds consumer confidence, some say. "There may be in fact a boomlet of support," said Mr. Breimeyer.
Another wild card for economists in Congress and its influx of new members.
"We're going to see the biggest batch of new legislation since the early days of the Reagan era," said Mark Vitner of Barnett Banks in Jacksonville, Fla. "It will look different, that's for sure."
The bank economists stress that although the presidential candidates have been forced to articulate economic plans in some detail, many elements remain unknown, making accurate forecasting somewhat difficult.
"We know market conditions are changing and policies will be different," Mr. Breimeyer said. "We don't know precisely what they're doing."