(11 NOVEMBER 2017)Thought of the week:A year later, where are Trumponomics?
One year after US President Trump's victory, it is too early to see the Trump effect in economic numbers. Politicians are not that important in the short term. Economies generally react to policy changes with a long lag. The Trump effect will only show up in future numbers.
Infrastructure spending has not happened beyond disaster relief. Agreeing a budget for the next fiscal year is still a work in progress. The tax reform proposals from Congress would create some stimulus.
The economics of global trade has also not changed. Leaving the TPP trade deal before it started may affect future trade, but does not change trade today. Other trade sanctions have been very minor.
Deregulation is more difficult to assess. There has been no fall in total regulation, but the growth of regulation has stalled. Slow implementation of current regulation coupled with expectations for fewer new regulations is a support for equity prices. Economic activity has not been measurably impacted to date; that may change.
The direct economic Trump effect comes mainly from inactivity (not regulating, not pursuing TPP). The indirect economic Trump effect is a failure to reverse US society's polarization. This may be a more serious economic legacy.
(By UBS)
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