Economists fear Trump’s policy risks

WASHINGTON — U.S. business economists are concerned about the risks of some of President Donald Trump’s economic policies, saying they fear his tariffs and higher budget deficits could eventually slow the economy.

More than 90 percent of economists surveyed by the National Association for Business Economics in a report being released Monday said they think the Trump administration’s current and threatened tariffs will harm the economy.

The administration has imposed tariffs on goods from many of America’s main trading partners — from China and Europe to Mexico and Canada. Trump officials argue that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But so far, U.S. trading partners have simply retaliated with tariffs of their own.

About two-thirds of the respondents saw negative effects if the U.S. withdraws from the North American Free Trade Agreement with Mexico and Canada.

Seven in 10 of the economists surveyed by the association said they thought Trump’s tax cuts were “too stimulative” because of the resulting increase in the naVenezuelan

● tional debt, even though twothirds said the corporate tax cuts generally benefit their companies.

The 251 respondents, surveyed between July 19 and Aug. 2, said they do envision some of Trump’s policies as supporting the economy. Eighty percent, for example, told the association that the administration’s efforts to ease regulations would boost growth in the short run.

As a whole, though, the responses of the business economists represent a rebuke of the Trump administration’s overall approach to the economy. The administration has been hailing a recent pickup in growth as heralding the start of an enduring and more vigorous economic boom.

Trump has also touted low rates of youth unemployment and, recently, falling joblessness among black and Hispanic workers.

Job gains overall have been solid, and the economy expanded at a brisk 4.1 percent

annual pace in the April-June quarter. The Trump team has also portrayed a bump in retail sales and the confidence expressed in surveys of consumers and small businesses as evidence of more robust growth ahead.

“Our economy, our investors, our workforce are crushing it right now,” Larry Kudlow, the top White House economic adviser, said at a Cabinet meeting Thursday. “Any business economist worth his or her salt would look at these trends and tell you we’re going for a while.”

But the surveyed business economists said they thought the $1.5 trillion in tax cuts over the next decade would produce higher budget deficits that should be reduced. The survey showed that while the economists expect the tax cuts to boost the economy this year, 62 percent forecast that the lower taxes would accelerate growth by an annual average of just 0.1 percent or less through 2027.

“In general, the panel expects the federal deficit, as a percentage of the economy, to grow in the longer term,

with eight out of 10 panelists indicating that fiscal policy should help shrink the deficit as a share of the economy,” said survey chair Jim Diffley, an economist at IHS Markit Ltd.

Almost two-thirds said the U.S. corporate tax system following the 2017 Tax Cuts and Jobs Act was an improvement over the previous regime in terms of equity and efficiency, while 25 percent viewed it as “somewhat worse” or “far worse” than before.

Changes to personal income taxes fared worse, with only 31 percent considering the new system better in terms of equity and efficiency and about 54 percent judging it “somewhat worse” or “far worse.”

Forecasters were more upbeat on the Federal Reserve, with 76 percent saying monetary policy is on the right track, the most in the semiannual survey in more than 11 years, according to the association. Nineteen percent of respondents in the current survey said policy is “too stimulative,” while 4 percent said the central bank’s stance is “too restrictive.”

“Most panelists believe the Federal Reserve’s current inflation target of 2 percent should be maintained. Of the remaining panelists, more favor raising the target than lowering it,” said association Vice President Kevin Swift, chief economist for the American Chemistry Council.

Though most respondents said they thought the administration’s drive to end many regulations would lift growth in the short run, nearly half said they felt deregulation would have negative consequences over the long term.

In addition, 60 percent said they believed economic policy should do more to address climate change. The Trump administration announced last year that it was withdrawing the United States from an international climate accord that was designed to reduce carbon emissions.

Seventy-four percent said economic policy should do more to alleviate income inequality.