(Drivebycuriosity) - It seems that the US economy is gaining speed. Analysts expect that the US GNP grew about 4% in the second quarter (frbatlanta). The economy is getting some tailwinds from President Trump`s economic changes. His tax cuts are raising company earnings and are encouraging investing & hiring.
He also curbed regulation, especially in the banking sector, which had hold back bank lending and daunted investing. I think that the business friendly attitude that Trump had shown last year gave the US economic a strong boost.
But now Trump is also causing severe headwinds. His trade war against China - and maybe Europe and the rest of the world - is irritating investors and the stock market and could slow down investing again. Trump`s tariffs will hike prices of imported goods, curb US exports and disrupt supply chains & production processes.
The trade war could reduce company earnings and slow down investing & hiring again. Trump´s sanctions against the Iran could reduce the global oil supply and and lift oil prices which will curb consumer spending in the US and will raise production costs.
In the moment the positive impulses of tax cuts & deregulation are dominating. I expect that in the rest of the year we will get strong economic numbers (BNP growth, retail sales, job market and so on) and sharply rising company earnings which should lift the stock market.
But if the trade war escalates and if the stupid Iran sanctions lead to sharply higher oil prices their harmful effects will get stronger and in the coming year the economic gains could get lost and the US economy could slow down again or even fall into a new recession. Trump has still the chance to moderate and keep the economy on a strong growth course.
No comments:
Post a Comment