During the presidential campaign, Donald Trump repeatedly described the U.S. economy as a “disaster.” The latest numbers, however, show the president-elect will, in fact, inherit a robust economy that’s now the envy of the world, with the lowest jobless rate in nearly a decade, record home and stock prices and a healthy growth rate.
It’s a radically different position from the one President-elect Barack Obama found himself in 2008 with markets crashing, the financial crisis spinning out of control and joblessness headed toward 10 percent.
Trump, instead, will take office with an economy near full employment and wages and spending rising. The economy is in such strong shape that the Federal Reserve is likely to raise interest rates again later this month to try and cool things off.
But experts are sounding the alarm that Donald Trump’s economic policies will force the U.S. into a crippling recession within his first two years in office.
London-based Legal & General (L&G) — a 200-year-old insurance and investment firm — announced Wednesday that the United States is likely to plunge into a severe recession before the next presidential election if President-elect Donald Trump’s plans for the economy come to fruition.
L&G specifically referenced Trump’s goals of slashing federal tax rates for corporations and individuals while pushing forward a$1 trillion infrastructure plan in their assessment of the future of the U.S. economy.
His tax plan, if implemented, would result in an even greater tax break for the richest one percent of Americans than even the loathed Bush tax cuts.
“This is an unsustainable path and it will cause a bond market riot,” Tim Drayson, who is the lead economist at L&G Investment Management, told the London Telegraph. “At some point, the bond market will freak out about this,” he added.
Drayson explained that Trump’s policies will initially boost GDP growth, but that the increase will be short-lived.
“He will not be able to maintain these fiscal plans indefinitely and someone will have to come into the White House to clean up the mess that it looks like he is about to create,” Drayson said.
He added: “We think there is going to be a cost to this growth in the form of a downturn in 2019, Drayson said. “If we get the full Trump plan, there will be a boom in 2017 and 2018, followed by a catastrophic bust in 2019.”
Because the U.S. dollar is a dominant currency in global markets and a major exporter to Western countries like the United Kingdom, Drayson worries that the Trump recession would reverberate across the Atlantic and impact Britain’s economy, as well.
With a Republican supermajority in both houses of Congress, Trump appears poised to be able to enact the bulk of his agenda unimpeded, at least until the 2018 midterm elections.
Brace for impact, folks!