Trump’s signature policy proposals – fiscal stimulus, a more restrictive immigration policy and trade protectionism – are bullish for the US dollar and bearish for bonds.
The Tax Policy Center estimates that Trump’s tax plan alone would increase the federal debt by $6.2 trillion over the next ten years (excluding additional interest). We doubt that Congress will approve anything close to that. Nevertheless, even if he gets one quarter of the revenue and expenditure measures that he is seeking, this would be enough to boost aggregate demand growth by 0.5-1.0% per year over the next two years.
This post was published at FinancialSense on 11/17/2016.
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