US President Donald Trump, in partnership with congressional Republicans, is pursuing tax cuts that will blow up the fiscal deficit and add to the public debt, while benefit the rich at the expense of middle- and working-class Americans. Once again, Trump has not hesitated to betray the people he conned into voting for him.
The International Monetary Fund, which in recent years had characterized global growth as the “new mediocre,” recently upgraded its World Economic Outlook. But is the IMF right to think that the recent growth spurt will continue over the next few years, or is a temporary cyclical upswing about to be subdued by new tail risks?
Since the summer of 2016, the global economy has been in a period of moderate expansion, yet inflation has yet to pick up in the advanced economies. The question that inflation-targeting central banks must confront is straightforward: why?
Now that US President Donald Trump has been in office for six months, the prospects for the US economy and economic policymaking under his administration can be more confidently assessed. And, like Trump’s presidency more generally, paradoxes abound.
Financial markets are starting to get rattled by the winding down of unconventional monetary policies in many advanced economies. But such policies may not be gone for long, because a new recession or financial crisis would force central banks to deploy measures such as quantitative easing and negative interest rates once again.
Recent economic data from around the world suggest that growth could soon accelerate, now that the global economy has weathered multiple crises over the past two years. And yet the possibility of another global slowdown – if not an outright stall – cannot be ruled out.
Even with geopolitical conflicts proliferating around the world, global financial markets have reached new heights. But while there are many explanations for why investors might be underpricing today's risks, there is no good reason for them to ignore the possibility of another "black swan" event on the horizon.
After failing to "repeal and replace" the Affordable Care Act, US President Donald Trump and congressional Republicans are now pursing tax reform, as if this will be any easier. It won’t be, as evidenced by the fact that all of the Republicans’ initial proposals are already dead in the water.
US Republican leaders claim that a border-adjustment tax – which would effectively subsidize US exporters and penalize importers – would improve the US trade balance and boost domestic production, investment, and employment. They are wrong.
Expectations of stimulus, lower taxes, and deregulation might boost the US economy and the stock market’s performance in the short term. But US President Donald Trump's inconsistent, erratic, and destructive policies will take a heavy toll on domestic and global economic growth in the long run.
When America pursued “America first,” policies in the 1920s and 1930s, it brought on the Great Depression and helped sow the seeds of World War II. If US President-elect Donald Trump shifts US geopolitical strategy similarly toward isolationism and unilateralism, there is little reason to expect a better outcome.
If the US Federal Reserve becomes too hawkish too soon, it will strengthen the US dollar, undermining Donald Trump’s stated goal of creating jobs and boosting incomes for his blue-collar base. Given his proposed fiscal expansion, Trump would be better off keeping Barack Obama's dovish appointees.
Donald Trump is a businessman who relishes the “art of the deal,” so he is by definition more of a pragmatist than a blinkered ideologue. Once in office, he will throw symbolic red meat to his blue-collar supporters, while reverting to the same supply-side, trickle-down economic policies that Republicans have favored for decades.