Despite rising stock prices, some experts remain concerned that economic proposals from the campaign of President Donald Trump will hurt the economy.
Last year, some economists predicted large decreases in financial markets, reduced hiring and an increased risk of a recession.
However, stock market measures have reached record high levels in the month since Trump took office as the 45th president of the United States. Employment numbers have met expectations and consumer confidence has remained strong.
VOA spoke with economist Mark Zandi of Moody’s Analytics, a company that provides research of financial markets. Zandi supported the economic proposals of Hillary Clinton’s campaign. And he remains concerned that economic measures proposed by the Trump administration will hurt the economy.
“If Mr. Trump got precisely what he wanted, the policy proposals that he had put forward, what would happen to the economy? And the answer is, the economy would go into a deep recession,” he said.
Zandi told VOA that he has not changed his position from last year. The economist noted that as president, Trump has not yet enacted any policies that he promised during the campaign.
“What he wanted was 11 million undocumented workers to leave the country. What he wanted was a 45 percent tariff on China, 35 percent on Mexico. What he wanted was tax cuts and government spending increases that would increase the budget deficit by $10 trillion over 10 years. So if that is what he got, that would lead to a recession,” Zandi said.
Others, however, say the increase in stock prices shows that investors are optimistic about the future. They say many people believe that tax reductions on businesses and fewer regulations will lead to higher profits.
Gus Faucher is an economist with the bank PNC. He says investors are looking to tax cuts that will increase business profits, which is good for stock prices. That, he says, has lifted stock prices recently.
Investors will be disappointed, Faucher says, if Trump does not propose clear policies to increase growth. Still, he says the economic outlook is better than it was a few months ago.
Other economists say Trump’s positions on taxing imports and trade disputes present a risk to the world economy.
Trump already has rejected the Trans-Pacific Partnership free trade agreement with 12 Pacific nations. He also has said he wants to renegotiate the North American Free Trade Agreement, or NAFTA. Critics of the deal say it has cost America jobs.
Mark Zandi, however, expressed concern that the U.S. is pulling back from the world economy, which has provided a lot for the American people.
“The United States is at the center of the global economy. It’s taken hundreds of millions of people out of poverty and brought them into the middle class. Think about Eastern Europe, think about China and Asia,” he said.
Americans, Zandi said, have been greatly helped by the less costly goods that result from free trade. And he warns, “If we pull back on globalization, the world suffers and we will also suffer.”
Republicans control both houses of Congress and the White House. Zandi expects that Congress will approve many of Trump’s policy proposals although the early days of the administration have been difficult.
Some economists, however, question whether conservative Republicans will approve tax cuts without knowing how they will be paid for.
Along with major tax cuts for businesses, Trump has proposed heavy spending on roads and other needed infrastructure. But, he also has called for more border agents and a wall between the U.S and Mexico.
Words in This Story
consumer confidence – n. a measure of how people think the economy will perform in the future
tariff – n. a tax on products imported or exported from a country
optimistic – adj. believing the future will be good
outlook – n. The way that people think about something, often the future
globalization – n. a process making trade and other important activities easier to do internationally, the increasing integration of countries and markets