Are you confused about the incoming administration’s economic policies? Well, you’re not alone.
In Donald Trump’s defense, there are always going to be trade-offs – crafting a macro strategy that’s completely coherent is probably impossible given the number of variables involved.
That said, one gets the feeling that in the lead up to the election, the President-elect may have focused too much on what would play well with voters and too little on ensuring that his campaign trail promises were to some extent compatible.
Again, we can (sort of) forgive Trump, as campaigning is first and foremost about getting elected after all, but come January 20, he’s going to have to start figuring out how to reconcile a set of competing economic objectives and by all accounts, it won’t be easy. In fact, it seems entirely possible that the only kind of “trade-off” Trump is willing to support, is a literal “trade” “off” policy vis-a-vis China.
In any event, here’s a neat (if you’re into this sort of thing) flow chart from Citi that attempts to summarize what we know thus far:
The caption reads: “Red arrows indicate boost to economy, blue arrows indicated negative impact. For example, homeland investment act would put upward pressure on dollar, and strong dollar and increases in interest rates would have negative impact. Thickness of arrows indicates strength of impact; broken lines indicated factors not yet fully priced in by markets.”
One thing Trump has going for him: he’ll inherit a much better situation than Obama…