It was President Harry Truman who famously begged for a "one-armed economist." He was desperate for economic advice that did not end with "on the other hand." He needed hard actionable advice, not polite intellectual advice. I suspect he was seeking advice from academic economists, not business economists.
Members of the National Association of Business Economics are used to giving actionable advice, and I have been a member for many years. I don't always agree with their consensus, but I do follow it closely.
The latest survey found the election of Trump will be mildly beneficial for the economy and increased their projection of GDP growth from 1.6% to 2.2%. In a stump speech, Trump said he expected 3.5% if he was elected. I hope so!
Asked what is the most important thing the Trump administration can do to stimulate GDP growth, 40% replied infrastructure spending, 36% replied tax reform, 15% replied regulatory reform, and a mere 4% said immigration reform was the most important economic stimulus. I agree!
They remain unworried about inflation, increasing from 1.3% this year to 1.9% next year. I hope so!
Housing starts should increase from 1.2 million this year to 1.3 million next year. I hope so!
Reflecting the stronger dollar, they expect the trade deficit to increase from $540 billion last year to $550 billion this year and $585 billion next year. (Hey, do you want a strong dollar or not?)
Few expect a recession in the next two years. I agree!
My perspective is that the stock market is getting ahead of itself but not greatly. The increased profits from economic stimulus will not appear until 2018 at the earliest. While not ignoring the continuing concern of a "Jim Fixx" moment, I see no recession in the near-term. Infrastructure spending is a great Keynesian economic stimulus. Tax reform is a great Supply-side economic stimulus, if it works this time. Since that is unknowable at this point, I will just enjoy the sunny economic weather for now.
Members of the National Association of Business Economics are used to giving actionable advice, and I have been a member for many years. I don't always agree with their consensus, but I do follow it closely.
The latest survey found the election of Trump will be mildly beneficial for the economy and increased their projection of GDP growth from 1.6% to 2.2%. In a stump speech, Trump said he expected 3.5% if he was elected. I hope so!
Asked what is the most important thing the Trump administration can do to stimulate GDP growth, 40% replied infrastructure spending, 36% replied tax reform, 15% replied regulatory reform, and a mere 4% said immigration reform was the most important economic stimulus. I agree!
They remain unworried about inflation, increasing from 1.3% this year to 1.9% next year. I hope so!
Housing starts should increase from 1.2 million this year to 1.3 million next year. I hope so!
Reflecting the stronger dollar, they expect the trade deficit to increase from $540 billion last year to $550 billion this year and $585 billion next year. (Hey, do you want a strong dollar or not?)
Few expect a recession in the next two years. I agree!
My perspective is that the stock market is getting ahead of itself but not greatly. The increased profits from economic stimulus will not appear until 2018 at the earliest. While not ignoring the continuing concern of a "Jim Fixx" moment, I see no recession in the near-term. Infrastructure spending is a great Keynesian economic stimulus. Tax reform is a great Supply-side economic stimulus, if it works this time. Since that is unknowable at this point, I will just enjoy the sunny economic weather for now.
