What Does a Trump Presidency Mean for the Economy?

What Does a Trump Presidency Mean for the Economy?

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    Trump Presidency and the Economy - Alvexo

    Donald Trump’s upset over Hillary Clinton for the U.S. presidency was just the beginning. Now comes the aftermath—what does a Trump presidency mean for the economy?

    “We have a great economic plan,” he said in his acceptance speech this week. “We will double our growth and have the strongest economy anywhere in the world.”

    Trump is a self-made billionaire, so the question arises on if he can have the same great success with the entire U.S. economy. His election could have fairly immediate impacts on many issues of the economy throughout the U.S. and the world.

    Infrastructure Spending

    Trump will fix inner cities - Alvexo

    A hallmark of Trump’s economic plan is increased spending that largely falls under his plans to improve infrastructure throughout the country, which could lead to major job creation and a manufacturing boon to the economy.

    “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, and hospitals,” Trump stated. “We’re going to rebuild our infrastructure, which will become second to none. And we will put millions of our people to work as we rebuild it.”

    The plan would add $1 trillion to infrastructure without increasing the national deficit. In theory, private companies would invest $167 billion with the aid of tax credits, and the remaining fund would come from debt, thanks to low interest rates. Any kind of big spending program in that realm would benefit the makers of construction equipment, building supplies, and materials and is estimated to create as many as 13 million jobs.

    Trump’s pro-growth plans will likely be aided by the election of a Republican-controlled Congress. His economic advisor also stated that the president-elect has plans to quickly replace current Federal Reserve chair Janet Yellen, and experts say that odds of an interest rate hike in December have lengthened.

    Taxes

    Trump’s tax plan includes sweeping tax cuts, including the elimination of the Alternative Minimum Tax. Trump’s plan would combine the current seven tax brackets into three and lower the top rate to 33% from 39.6%, which means that all Americans would pay less taxes but that the rich would get the biggest tax break. The idea behind the widespread tax cuts is to increase consumer spending and infuse more money into the economy.

    Running from the Tax Man - Alvexo

    The results of enacting this plan could be mixed, with some predicting that lower tax rates, especially for the rich, could increase the country’s deficit. Estimates currently state that tax revenue over the next decade would fall by $6.2 trillion, but Trump says that deficit would be mitigated by increased economic confidence, jobs, and spending. Others state that lower taxes could boost spending over the next two years, which makes up about 70% of the economy, leading to a big economic boost.

    The big tax question is if Trump’s plan can really be put into action. Even with a Republican Congress, experts estimate that only about one-third of his tax cuts will be approved.

    Jobs

    One of Trump’s strongest campaign areas was surrounding immigration. Trump has promised to build a wall between the U.S. and Mexico and to deport the 11 million undocumented immigrants in the country. Aside from the geopolitical implications, such an act could also have a huge effect on the economy. Immigrants make up a large portion of the workforce in many industries and comprise 5% of the total workforce, and the idea of removing those workers could lead to unknown consequences. However, it remains to be seen if Trump’s immigration plans will actually be put into effect or if his attention-grabbing promises were simply campaign rhetoric.

    However, even if Trump’s economic plan leads to growth and more jobs in the long term, it could take some time to get off the ground, as is typical with most new administrations. Trump is also focused on other, non-economic issues, so the economy could slow in the short term before potentially pick up again, experts believe.

    Stock Market

    As election night results slowly rolled in, the Dow Jones started to drop, going down more than 800 points before the winner of the presidency was officially announced. However, with the official declaration of Trump as president-elect, the market recovered quickly, much more quickly than many experts predicted, especially after the longer-term effect Brexit had on the British markets just months ago.

    What will be with Trump Presidency - Alvexo

    The day after the election, the Dow Jones Industrial Average closed up 256 points, ending the day just 40 points below its all-time closing high. Stocks continued to increase the next day, which could be a good sign of things to come in the market. The quick market rebound comes due to the end of uncertainty and a tumultuous election, as well as the clean sweep of Republicans in Congress and the White House, which many investors view as good for business.

    In response to Trump’s increase infrastructure plans, construction stocks have been trading up and could continue to do so if the building plans stay in the spotlight. Other industries expected to thrive under a Trump presidency include oil and pharmaceuticals, as Trump is expected to loosen regulations in those areas.

    The Trump presidency will undoubtedly begin with some uncertainty, but many experts are pointing to economic success for the country and the world.

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