Goldman Sachs: Trump’s ‘Fiscal Boost: Mainly a 2018 Story’

Analysts at Goldman Sachs came out with their report on the impact of Trump’s fiscal spending on the US economy.

Key Points:

Expect fiscal policy to become more expansionary next year

The timing is uncertain

GS' preliminary expectation is that the growth effects from looser fiscal policy would be concentrated in Q4 2017 and the first half of 2018

The timing depends mainly on how long it takes tax legislation to become law, and whether Congress legislates a prolonged phase-in or implements the full tax cut in the first year

Infrastructure and federal spending are also potential factors. On the former, the lags are often quite long ... On the latter, a boost to defense spending looks likely sometime between Q2 and Q4 2017, but this may be partly offset with cuts to non-defense spending in the same timeframe

The effect of Obamacare "repeal and replace" is less clear ... likely to provide a modest net stimulus in the near term-potentially as soon as Q2 2017, this as result of the likely repeal of the taxes used to pay for some of the program

Other changes are likely but seem unlikely to be implemented until 2019.