The Trump Boom?
Exactly how much US President-elect Donald Trump’s policies will raise output and inflation will depend on how close the US economy is to full capacity. If the economy really does have massive quantities of underutilized and unemployed resources, the effect of Trumponomics on growth could be considerable.
CAMBRIDGE – After years of hibernation, will the US economy rouse itself for a big comeback over the next couple of years? With an incoming Republican administration hell-bent on reflating an economy already near full employment, and with promised trade restrictions driving up the price of import-competing goods, and with central-bank independence likely to come under attack, higher inflation – likely exceeding 3% at times – is a near-certainty. And output growth could surprise as well, possibly reaching 4%, at least temporarily.
Impossible you say? Not at all.
The economy already seems to be growing at a 3% annual clip. And even steadfast opponents of President-elect Trump’s economic policies would have to admit they are staunchly pro-business (with the notable exception of trade).
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