by Calculated Danger on 11/11/2024 11:53:00 AM
After the election in November 2016, I identified that the economic system was strong, that there have been vital financial tailwinds and that it was unlikely that Mr. Trump would do the whole lot he stated through the marketing campaign (emphasis added). See: The Future remains to be Shiny! and The Cabinet is Full. I used to be fairly optimistic on the financial outlook!
By early 2019, I used to be turning into extra involved: “So far Mr. Trump has had a limited negative impact on the economy. … Fortunately the cupboard was full when Trump took office, and luckily there hasn’t been a significant crisis“. Sadly, the COVID disaster struck in early 2020 and Trump carried out poorly.
As soon as once more, the economic system is in good condition (final week Fed Chair Powell known as the economic system “remarkable”), and it’s unlikely Mr. Trump will do most of what he stated through the marketing campaign. For instance, he promised no taxes on suggestions or additional time, the return of $2 gasoline, repealing and changing the ACA, and deporting 20+ million folks. All of that’s unlikely. There are various different proposals, equivalent to revamping the Federal workforce and dramatically chopping the Federal price range, which might be unclear.
Trump will seemingly renew the tax cuts for the rich, enhance tariffs – particularly on imports from China – restrict authorized immigration (Trump stated the “Country is full”), and enhance deportations (however not anyplace near the 20 million he stated through the marketing campaign). Word: I do not count on any tariffs on Canada and Mexico.
Nonetheless, the financial tailwinds are extra restricted in 2024 than in 2016, so the margin for error is smaller.
Click on on graph for bigger picture.
The primary graph exhibits single and multi-family housing begins since 2000.
The black arrow factors to the election in 2016, and I used to be projecting additional will increase in housing begins.
It now appears seemingly that housing begins will transfer extra sideways.
Additionally, in 2016, demographics have been enhancing, and the biggest cohort in US historical past was shifting into their peak incomes years. Now, demographics are extra impartial, and probably even damaging if authorized immigration is proscribed.
Additionally, I do not count on any progress over the following 4 years on key long-term financial points like local weather change and earnings / wealth inequality (that can seemingly worsen).
Since Trump’s insurance policies won’t be proof primarily based (he rejects information that does not match his views), I count on usually unhealthy outcomes. Nonetheless – as in his earlier time period – unhealthy insurance policies would possibly imply increased deficits with little return – not an financial downturn. Till we see the precise coverage proposals, it’s exhausting to foretell the influence. I’ll write extra as insurance policies are enacted. Nonetheless, I am not sanguine.
