Could The Twitter President’s Trumponomics Work?

An economist says yes

Even before taking office, Donald Trump is having an impact on the economy. His tweets on automakers investment and plant-opening decisions are affecting their stock price, and some attribute the Dow’s flirtation with 20K to “Trumponomics.”

With Twitter having such an impact in the real world, some are calling Trump “The Twitter President.”

Now, the chief economist for Deutsche Bank is saying Donald Trump’s economic policies could lead to a doubling of US GDP growth.

In a report, David Folkerts-Landau even says Trump’s economic plans could become a “global template.”

According to projections, growth in 2017 could be 2.4% and then reach 3.6%.

The report attributes the increased growth to a $1 trillion infrastructure program, the cutting of regulations, as well as cuts in personal and corporate tax rates.

This isn’t really that surprising, as it comprises a fairly traditional stimulus program. In fact, it combines programs favoured by the left (infrastructure), and the right (regulation cuts and tax reductions).

A combination of the those approaches would be expected to grow the economy, while also adding to the deficit.

The projection is that worldwide economic growth will also increase as a result of America’s boom, going from 3% to 4.3%.

Of course, it should be noted that these predictions are from the same people who said the housing market wasn’t a problem, and – in Deutsche Bank’s case – participated in the housing market collapse.

Nevertheless, the report seems confident about the positive benefits of Trump’s economic plan:

“This policy will be successful in moving the U.S. economy away from low-growth secular stagnation towards significantly more buoyant performance,” said the report. “We would not be taken by surprise by a doubling of the growth rate of real GDP in the U.S. over the next two years, nor by a further significant move up of equity valuations and a material further appreciation of the dollar.”

The success of Trump’s economic policies would represent a repudiation of the status quo on both ends of the political spectrum. Those on the left have seen more government and increased regulation as the answer, while the right has pushed massive tax cuts combined with cuts in government investment. And both the left and right have been moving towards unfettered free trade – despite the damage to wide swathes of the economy.

Trump’s approach would reject the move towards more free trade, while making businesses more competitive through reduced taxes and regulations, and increased government investment in infrastructure projects.

If Trump takes that approach, and if it works, it would send a message that the old economic orthodoxy on both the left and the right is breaking down.

That would be a good thing.

However, it’s always possible Trump will just hand it all off to the Republican Congress, who would much rather do the tax and regulation cuts while leaving out any infrastructure.

If that happened, all the benefits would accrue to those at the top, while working people would be left behind again.

That wouldn’t be a new template for the world. It would be nothing but a continuation of the failed status quo.

Spencer Fernando

Photo – Twitter