by Calculated Threat on 11/11/2024 11:53:00 AM
After the election in November 2016, I identified that the financial system was strong, that there have been vital financial tailwinds and that it was unlikely that Mr. Trump would do all the pieces he mentioned in the course of the marketing campaign (emphasis added). See: The Future remains to be Vivid! and The Cabinet is Full. I used to be fairly optimistic on the financial outlook!
By early 2019, I used to be changing 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 financial system is in good condition (final week Fed Chair Powell referred to as the financial system “remarkable”), and it’s unlikely Mr. Trump will do most of what he mentioned in the course of the marketing campaign. For instance, he promised no taxes on suggestions or time beyond regulation, the return of $2 gasoline, repealing and changing the ACA, and deporting 20+ million individuals. All of that’s unlikely. There are numerous different proposals, resembling revamping the Federal workforce and dramatically chopping the Federal finances, which are unclear.
Trump will probably renew the tax cuts for the rich, improve tariffs – particularly on imports from China – restrict authorized immigration (Trump mentioned the “Country is full”), and improve deportations (however not anyplace near the 20 million he mentioned in the course of the marketing campaign). Observe: I do not anticipate 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 probably that housing begins will transfer extra sideways.
Additionally, in 2016, demographics had been enhancing, and the most important cohort in US historical past was transferring into their peak incomes years. Now, demographics are extra impartial, and probably even destructive if authorized immigration is restricted.
Additionally, I do not anticipate any progress over the subsequent 4 years on key long-term financial points like local weather change and earnings / wealth inequality (that can probably worsen).
Since Trump’s insurance policies is not going to be proof based mostly (he rejects knowledge that does not match his views), I anticipate usually dangerous outcomes. Nonetheless – as in his earlier time period – dangerous insurance policies may imply larger deficits with little return – not an financial downturn. Till we see the precise coverage proposals, it’s laborious to foretell the impression. I’ll write extra as insurance policies are enacted. Nonetheless, I am not sanguine.
