President Donald Trump made a lot of economic promises during his campaign and even into his presidency, but it appears that members of a key federal agency do not believe he can live up to those promises. Obviously, when President Trump took office, he did so after being considered one of the most unqualified candidates in history by his critics. Unlike most candidates and Presidents, Trump did not have a role in a government agency as a governor, senator, or representative.
Trump did not even have a background in law or the armed forces like others have had. This left many to wonder if he could deliver on his promises, but one thing many people, even his detractors, thought was his strongest point might be economics, concerning taxes and many other things plaguing people. The hope was that he could lower taxes and put a budget together that would utilize every key agency in the government.
His first Congressional Budget has drawn a lot of controversy and hate from various Americans, but it seems that this is not the only hurdle for Trump when it comes to the economics part of being President. There are a few members of the Federal Reserve who do not feel a Trump boom is on its way from a financial standpoint. With Trump promising a lot of economic growth, he would be under great fire if things did not go well. So, what’s all the trouble concerning?
In the release of the minutes from the Fed’s March meeting, members of the Federal Open Markets Committee discussed the possibility that a large fiscal stimulus could be driven by President Trump and his administration would be able to kick-start the U.S. economy. Not knowing for sure, the discussions arose. We know Trump promised to return the United States to a sustained 4 percent annual GDP growth, but this eventually got downgraded to a 3 percent target.
We also know he wants to slash taxes in a big way, invest around $1 trillion in infrastructure, expand job opportunities, and much more. Of course, this is not even taking the wall into account. That’s another case on its own. All of this sounds somewhat intriguing for Trump supporters, but the Feds do not believe he will be able to get the results he is pushing for.
All of this uncertainty over Trump passing his reforms have become so high that many members haven’t even factored in a Trump stimulus into the economic forecast. The minutes show a lot of interesting thoughts from the federal reserve. A few key parts have been highlighted for the country to check out.
“Participants continued to underscore the considerable uncertainty about the timing and nature of potential changes to fiscal policies as well as the size of the effects of such changes on economic activity. However, several participants now anticipated that meaningful fiscal stimulus would likely not begin until 2018. In view of the substantial uncertainty, about half of the participants did not incorporate explicit assumptions about fiscal policy in their projections.”
This comes at a time of uncertainty in President Trump regarding his ability to follow through on most of his economic promises. The issues are continuing to grow, and this affects a lot of things. It is said those who would benefit most from Trump’s plan to cut taxes are falling behind due to the missed opportunity at installing a new healthcare bill from the GOP.
After the economy soared following the election of President Trump, positive sentiment surrounding the economy has stabilized. Recent “hard data” has shown that actual economic activity is not keeping up to the sentiment boost. So, basically people, especially Wall Street, all assumed that electing Trump would boost the economy. We saw a rise and hope that there would be an economic boom. However, the love for this has not produced any real results that were hoped for.
Some members of the fed noted that seemingly non-economic policies that Trump has been talking about could very well end up hurting economic activity as well. Fed Chair Janet Yellen mentioned some possible negative shocks regarding more restrictive immigration policies and the repeal of the Affordable Care Act in her latest testimony in Congress this past February.
“At the same time, some participants and their business contacts saw downside risks to labor force and economic growth from possible changes to other government policies, such as those affecting immigration and trade.”
This, of course, fits with Yellen’s description. In theory, President Trump could certainly shift the economy, but it is unknown if he can shift it in a positive direction yet or not. As of now, it does appear that specialists in the economic department feel that he will not be able to accomplish this with the plans he has in place. Of course, he could adjust things as times goes on, but even then, the economy is not an easy fix at the end of the day.
[Featured Image By Evan Vucci/AP Images]