Economists are becoming less confident about US economic growth in light of Trump’s trade and budget policies. The experts are also not convinced that the current gains coming from the GOP tax cuts will be sustainable. According to a survey done by the National Association for Business Economics, 91% of all the people interviewed think that the ongoing trade tariffs and the threats of more to come are having a negative effect on the US economy.
The survey also noted that at least two-thirds of the economists surveyed felt that the US will suffer significant losses if it withdraws from the North American Free Trade Agreement with Canada and Mexico. The economists interviewed in the survey also felt that there’s a need to reduce the current budget deficit. Nonetheless, most of them are not confident that this will happen. A big percentage of the experts believe that the current federal deficit as a percentage of GDP will grow in the longer term unless there’s a significant shift in policy from the White House.
This recent pessimistic view is in sharp contrast with how President Trump sees things. Just recently Trump declared in a tweet that the US economy is in fact “better than ever.” The president also touted low unemployment numbers especially among the youth, Hispanics, and African Americans. It seems from the survey that the main bone of contention is the growing government debt.
Most of the respondents agree that the new corporate tax policy that came into effect as a result of the GOP tax bill is more favorable compared to previous policies. But even then, not many believe that the current economic boost resulting from the tax reforms will last long. Despite this gloomy outlook, the survey found that many experts were more upbeat about the current monetary policy by the Federal Reserve. The panelists believe that current monetary policy decisions have been very robust and they expect this to continue. The panelists also believe that the Fed’s inflation target of 2% should be maintained. However, the experts who favor an increase are more than those who favored a decrease.
There was also the question of climate change in the survey. 60% of the panelists think that the White House should do more on the policy front to mitigate climate change. There was a feeling too that despite the current progress on the economy the administration still needs to do more to alleviate income inequalities. 70% of all the respondents interviewed agreed that this is still a big issue. The survey also focused on the dilapidated state of the US infrastructure. However, 63% of these experts don’t think that there will be a meaningful resolution to this issue in 2019.
The GOP tax cuts have so far been the cornerstone of the Trump administration on economy. The White House believes that these reforms have helped stimulate growth and employment but how sustainable they will be remains the biggest question. The ongoing escalation of trade tensions between the US and other major economies in the world still remains a very important issue for many economists.