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

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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


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 is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

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