Policy will not support US growth as much as expected
Friday, April 21, 2017
US economic outlook.
US equity markets have rallied and the dollar has strengthened against the euro since President Donald Trump was elected in November 2016 -- largely on expectations that stimulative policies will be introduced. One of Trump's campaign promises pledged to reform corporate taxes and lower tax rates, which would be expected to boost capital spending. He also pledged to raise infrastructure spending by 1 trillion dollars over ten years, as well as to reduce regulatory burdens to help jumpstart business investment.
- Trump could use executive powers in a more sweeping fashion if he cannot deliver changes via legislation.
- US opposition to reforms of international financial institutions could reduce the momentum behind global cooperation.
- If the proposal to finance the 1-trillion-dollar infrastructure plan by public-private partnerships is a success, 2018 GDP will benefit.
- If agreed by 2018 or 2019, corporate tax reform could boost GDP growth although the impact could be diluted if other countries follow suit.
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