US: Impact of a Trump administration on growth is uncertain - Commerzbank

Research Team at Commerzbank suggests that the impact of a Trump administration on US growth is uncertain but is likely to be limited, in particular in 2017, but US economic growth should anyway be above potential at 2%

Key Quotes

“It remains unclear what measures he will take, implementation will take some time and the US economy is close to full employment – likely lowering the impact of fiscal stimulus on growth anyhow. Trump is willing to cut corporate taxes and income tax, which should bring relief of $4,500bn or 2% of GDP over the next ten years according to the non-partisan Committee for a Responsible Federal Budget (September 2016). The impact of his infrastructure spending plans remains to be seen too: tax concessions are supposed to bring private investors on board rather than to raise government spending.”

“During the first 100 days of his presidency, Donald Trump is expected to pick the low hanging fruit – i.e. those promises that can be fulfilled via executive orders. This includes cancelling the restrictions on energy, like the Keystone XL pipeline and a withdrawal from TPP (which has not been put into force yet anyhow and which he intends to replace with bilateral agreements).” 

“Longer term, greater protectionism is likely to have negative effects on US exporters too, and tariffs are likely to increase inflation. Less immigration – a cornerstone of Trump’s campaign – should lower potential growth as a smaller population means less demand and fewer workers.”