11/14/2016
5 Economist’s Post-Election Predictions

5 Economist’s Post-Election Predictions

U.S. economic policy will move in a new direction following the recent presidential and congressional races. Economists are now sifting through campaign trail promises and the likely priorities of both the new administration and Congress on issues including taxes, trade, immigration, regulations, healthcare and more.

Here are the opinions of several experts:

Paul Ashworth, Capital Economics
The conciliatory tone of Trump’s acceptance speech, according to Ashworth, helped to reverse some of the equities selloffs in the immediate aftermath of the election. Ashworth predicts an extended period of market volatility due to the as of yet uncertain direction the administration will take on many issues.

Stuart Hoffman, PNC Financial Services
Hoffman envisions an economic track that differs markedly from the basic bipartisan consensus the U.S. has used to guide policies since World War II. The new administration opposes current trade pacts and the Affordable Care Act and favors restrictions to immigration, cuts in personal income taxes for high earners, and a reduction in regulations. He predicts a high likelihood of the new administration’s favored policies becoming law due to the Republican control of both the House and Senate.

Bernard Baumohl, Economic Outlook Group
The outcome of the election has altered the group’s GDP forecast, according to Baumohl, and a cloud of uncertainty hovers over the private sector. The forecast, which had predicted a 2.7% growth in 2017, now sees the economy expanding at less than 1%, with a 60% chance of a mild two-quarter recession.

Kevin Logan, HSBC
Logan says HSBC predicts significant changes in fiscal policy. These include lower taxes, higher deficits, more restrictions on trade and the international flow of capital, and fewer government regulations. HSBC also forecasts a considerable reduction in the labor force if current immigration proposals are in fact passed and enforced.

Joseph Brusuelas, RSM US
Brusuelas foresees meaningful changes to the approach to growth and the Fed’s monetary policy. Most apparently, this includes a return to supply-side tax cuts, large operating fiscal deficits, and restoration of more traditional monetary policies that will eventually lead to higher short and long-term interest rates.

Many other experts say it’s still too early to know which plans will remain priorities after January’s inauguration. Only time will tell us how the shifting dynamics in Washington will translate to new rules for the country.

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