Prosperity and endless budget surpluses were the basic assumptions of the presidential campaign for both major parties. Yet whoever wins the White House may arrive to face the economic equivalent of a dimpled chad: slowing economic growth, and perhaps even a downward spiral into recession.
The new president's first worry, to be sure, will be how to shore up a sense of electoral legitimacy after a contested vote.
But as former President Jimmy Carter could testify, economic malaise can pose a real threat to a successful presidency.
"The Democrats may well be happy if they don't get the White House," says Mark Weisbrot of the Center for Economic and Policy Research in Washington.
Already the economy has slowed decidedly. That's no surprise, since Federal Reserve Chairman Alan Greenspan has been telling it to do just that. The Fed has raised interest rates six times since June 1999.
Most economists see growth in gross domestic product - the nation's output of goods and services - falling from a husky 5 percent after inflation this year to about 3.3 percent in 2001.
A minority expect worse.
David Levy, an economist with The Levy Institute in Mount Kisco, N.Y., calculates a 70 percent chance of a recession. Hoisington Investment Management Co. in Austin, Texas, puts the risk at above 50 percent.
"Recession's not baked in the cake," says Hoisington economist Lacy Hunt. "But the window of opportunity to avoid it is closing."
Pessimists also worry about a return of "stagflation," the combination of inflation and a slow economy that plagued Presidents Ford and Carter in the 1970s.
The concern is that often, when the economy slows, productivity also falters. Lately, productivity per hour worked has been rising at a healthy 3 percent rate, helping businesses to enjoy good profits without raising prices.
But so far this year, the core rate of inflation (excluding energy and food) has risen at a 2.7 percent annual rate. That's up from 1.9 percent for all of 1999.
Optimists expect inflation to remain tame enough that the Fed may cut interest rates soon to revive a too-slow economy.
Economists, both pessimists and optimists, see a host of other dangers along the path ahead. They include falling stock prices, a loss of confidence in the dollar, a bit more unemployment, shaky business and consumer debts, tight money, the impact of a possible Mideast crisis on oil prices, and weakening economies in Europe and Japan.
And some worry about political crisis in Washington, in the aftermath of the hard-fought battle for Florida's electoral votes.
"Are we going to be so divided that nobody can get on the same page?" asks James Glassman, chief economist at Chase Securities in New York.
Already, the total value of all US stocks has dropped more than 10 percent from its peak in March, based largely on concern for corporate profits, especially in the vaunted high-tech arena.
Stock-market blues, coupled with a recession, could easily force Washington to scale back its tax-revenue forecasts, further weakening prospects for the tax cuts and spending programs urged by Vice President Al Gore and Texas Gov. George W. Bush in their presidential campaigns.
Market woes could also threaten the feeling of consumer prosperity both men pledged to preserve. When stocks were going up, economists talked of a "wealth effect." By one estimate, consumers spent an extra $2.50 for every extra $100 in stock wealth. If the market keeps falling, it removes a powerful positive factor for the economy, says Mr. Levy.
Others are less worried about consumers. Americans, on average, still have about six times as much wealth as their annual disposable income, notes David Wyss, chief economist at Standard & Poor's in New York. That's a rise from the 1960-95 period, when wealth averaged 4 to 5 times income. So Mr. Wyss doesn't expect people to start saving a lot and thereby slow spending.
It would take a 40 percent drop in stock prices to cause a recession, he figures. "That's not out of the bounds of possibility, but it's a pretty big drop."
Another big risk for the new president is the nation's huge deficit in international payments, known as the current account.
"We can't go on forever with the huge trade deficits we have been experiencing in the last couple of years," says Robert Reischauer, president of the Urban Institute in Washington. "One wants that to unwind in a slow and gradual way. But often economic adjustments don't occur that way."
Foreigners have been financing the trade deficit by using the dollars they acquire to buy American stocks, bonds, and companies. If they lose confidence in the US, some of the money could leave. The dollar would decline in value.
"That would clearly pose a rocky start to a new presidency," says Stephen Roach, chief economist in New York of Morgan Stanley Inc., a major investment firm.
He sees two quarters of slow growth at the start of 2001. This puts the economy in a "window of vulnerability" for something worse - a serious slump rather than a "soft landing" from the economic boom.
A more common view is that Mr. Greenspan has achieved a soft landing for the economy. This would brighten his already glowing reputation.
"You can picture several more years of good growth," Mr. Glassman says. He and others count on the Fed - more than the White House - rushing to the rescue from any serious economic trouble.
Watching for savvy appointees
Nonetheless, many financial community eyes will be watching the economic appointments made by the new president.
"The days when the president could appoint political types to the Treasury are over, unless he is willing to take advice from a No. 2 with financial savvy," Wyss says. A President Gore, it is thought, might keep Treasury Secretary Lawrence Summers. The Clinton appointees to the Treasury understood financial markets.
A President Bush has a choice of conservative economists that have been advising him. These include Stanford University's John Taylor and Michael Boskin, Harvard University's Martin Feldstein, and a former Fed governor, Lawrence Lindsey.
"They are sensible and they are experienced," says Mr. Reischauer.
(c) Copyright 2000. The Christian Science Publishing Society