Every four years, a presidential race grips the United States. This year’s election comes with added weight and gravity for a number of reasons. The unprecedented nature of current events is at the forefront of everyone’s mind, from the pandemic to protests in America’s largest cities and the ongoing U.S.-China trade war.
When it comes to the HVAC industry, there’s a lot at stake. This election will set priorities for the next four years and those priorities will have a lasting impact on everything from infrastructure to energy, taxes and regulations. As Americans decide the direction they want the nation to go, let’s consider how the 2020 election could impact the HVAC industry.
What’s at Stake in 2020?
The HVAC market is projected to grow from $240.8 billion in 2019 to $367.5 billion in 2030. The HVAC industry as a whole has high employment rates and projected growth compared to other manufacturing industries in the United States. Part of this can be attributed to a booming construction industry across America as well as increasing temperatures resulting in greater demand for air conditioning and HVAC units.
The HVAC industry has largely been successful in the years following the Great Recession, with overall growth since 2010. The past few years under the Trump administration have been a continuation of this growth. However, the COVID-19 pandemic has decreased construction and home improvement activity, hurting recent industry statistics. This makes the next four years important as all manufacturing industries look to make up for losses caused by the pandemic.
The Trump-Pence and Biden-Harris administrations would support manufacturing industries like HVAC in different ways. A Trump administration would benefit HVAC markets through continued tax reform and deregulation. A Biden administration would mean increased support for infrastructure and environmental regulations. It could even drive demand for HVAC products, but it would come with an increased focus on corporate taxation and regulations.
Either way, these are long-term forecasts subject to the influence of many contributing factors. The recovery is unlikely to change in the immediate aftermath of the election. In other words, the HVAC industry should benefit from continued economic recovery across many parts of the sector short-term.
Tax Policy Forecasts
What about the impact of potential tax policies moving forward? The current Republican administration decreased corporate taxes from 35% to 21%. You can expect to see these lower tax rates continue should Trump be reelected. As for a Democrat administration? According to their plan, it could signal an increase in corporate tax rates to 28%.
Infrastructural Policies Discussed in 2020
Both parties have floated the need for infrastructure spending. But what that spending might look like remains a point of contention. If a significant infrastructure spending program occurs? It will positively impact the industrial sector and, more specifically, the HVAC industry. But what might it look like? It depends on who you ask.
Trump’s campaign has discussed a $1 trillion infrastructure package focused on transportation: meaning funding for upgrades or projects for roads, bridges, water and communications like 5G and rural broadband. Since first running in 2016, President Trump has expressed a desire for a large infrastructure deal. The administration detailed it’s most comprehensive plan in 2018 and has not released a new outline since. If implemented and funded, Trump’s plan would attract manufacturing.
Biden has discussed a $2 trillion package to address many of the same needs. His plan also focuses heavily on climate change reduction through:
- Energy-efficient homes
- Energy-efficient commercial buildings
- Low-emission cars
- Upgrading the electrical grid
- Zero-emission transit system
Based on the priorities outlined above, we can predict with some certainty that there would be a significant shift toward renewables and clean energy, away from fossil fuels. If the Democrats win and chase a more aggressive climate policy? It could also mean more demand within the HVAC industry, especially for companies on the cutting edge of environmental compliance. That said, a move away from fossil fuels to renewable energy could depress revenues for industries.
The HVAC Industry and a Focus on Energy Efficiency
The HVAC industry is uniquely positioned when it comes to energy efficiency. Unlike other industries, HVAC companies have a firm footing in commercial and residential efficiency goals and climate policy. The COVID-19 pandemic has also placed increased focus on air quality issues, particularly when it comes to reducing viruses. We don’t expect the presidential election to impact these gains in any appreciable way. The newfound demand for indoor air quality products and control strategies will only continue to grow in a post-pandemic world. Thus, we can assume the need for upgrading HVAC systems to remain a crucial theme no matter which party gains control.
Various 2020 Election HVAC Scenarios
We’ve focused primarily on the presidential election, perhaps understandable in this unique election cycle. However, it’s worth noting there’s more at stake than the White House. Americans are also voting for control of Congress.
If the election results in a Republican sweep? Expect lower taxes and a continued focus on deregulation. As for a Republican White House and divided Congress, there will still be support for infrastructure spending.
Should the Democrats sweep the election? We anticipate support for higher corporate taxes, significant infrastructure spending and the adoption of environmental regulations. As for a Democrat White House and a split Congress? Expect increased environmental regulations and lower emissions standards for transportation.
Regardless of the results of the 2020 election, HVAC and IAQ industries will continue to be in high demand. A recent report found that particulate pollution in the United States increased 5.5% between 2016 and 2018. Increasing pollution, the ongoing threat of COVID-19 and a desire for more energy-efficient systems are all motivating factors pushing consumers to consider and invest in HVAC upgrades and IAQ alternatives more than ever before.