Trump’s economic pledges may not hold up

WASHINGTON D.C.— U.S. economic growth is expected to accelerate this year and next, yet remain modest, even if U.S. President Donald Trump’s promised tax cuts and infrastructure spending are implemented, a survey found.

The economy will grow a solid 2.3 per cent this year and 2.5 per cent in 2018, according to 50 economists surveyed by the National Association for Business Economics. Those rates would be up from 2016’s anemic pace of 1.6 per cent.

Still, those rates are below the 3 per cent to 4 per cent growth that Trump has promised to bring about through steep corporate and individual tax cuts and more spending on roads, airports and tunnels.

Most of the economists surveyed assume that a tax reform package will be approved by Congress this year.

The survey also found that 70 per cent of economists think financial markets are too optimistic about the impact of Trump’s proposals, should they be enacted. The S&P 500 stock index has risen about 6.5 per cent since the presidential election on anticipation of faster growth stemming from Trump’s policies.

The economists surveyed work for companies, trade associations and in academia.

The results were compiled by Timothy Gill, an economist at the American Iron and Steel Institute; Steve Cochrane, an economist at Moody’s Analytics; and David Teolis at General Motors, among others.

Most of the economists assume that Trump’s tax proposals will pass in the second half of this year, though about one-fifth expect that it will take until next year.

Most do not expect an infrastructure package, even if it passes this year, to boost the economy until 2018, the survey found.