Report

Trump's Dilemma - Balancing Promises to Suppoerters with Need to Avoid Recession

posted by Richard Katz on November 22, 2016

Found in Global, US, categorized in Politics

Tags: Richard Katz TOE Trump recession

Report Cover

Headline

Incoming President Donald Trump faces a big dilemma. If he fulfills all of his most dramatic campaign pledges—especially trying to deport as many 11 million illegal aliens and launching a big trade war—he could set off a serious recession

Abstract

Key points:

- If Trump fulfills plans to deport 11 million illegal aliens, launch trade war with China and Mexico, and perhaps withdraw from NAFTA, it could spark serious recession
​- But failure to take action could lead supporter to regard him as another phony
​- Stock market and most economists are betting Trump will not fulfill these plans
​- His big tax cuts are seen as bullish: stimulus to economy from tax cuts will more than offset drag caused by rise in interest rates and the dollar
​- Economists still a bit higher growth under Trump than Clinton in 2018 (2.3% vs. 2.0%)
​- Dollar index vis-à-vis all trading partners has spiked to 15-year high, including weakening of yen back to ¥110/$
- Reason is widening gap between US and Japanese interest rates

About Richard Katz

Richard Katz

Richard Katz is Editor of The Oriental Economist Report, a monthly newsletter on Japan, as well as the semi-weekly TOE Alert e-mail service on Japan, and is also a special correspondent at Weekly Toyo Keizai, a leading Japanese business weekly.

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