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World Bank: Trump Policies Could Double US GDP

| by Lauren Briggs

A top economist at Deutsche Bank projected that President-elect Donald Trump's upcoming presidency will double the Gross Domestic Product  (GDP) and usher in a new era of economic prosperity.

The German-based U.S. bank's leading economist, David Folkerts-Landau, advised clients in a report that Trump's legacy would likely be a "game changer for the U.S. economy," leading to 2.4 percent growth in 2017 and 3.6 percent in 2018, according to CNBC.

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"This policy mix has the potential of reigniting productivity growth and raising U.S. growth potential," Folkerts-Landau said, notes CNBC. "While Trump introduces higher uncertainty, this is better than the near certainty of the continuation of a mediocre status quo… This policy will be successful in moving the U.S. economy away from low-growth secular stagnation towards significantly more buoyant performance. We would not be taken by surprise by a doubling of the growth rate of real GDP in the U.S. over the next two years, nor by a further significant move up of equity valuations and a material further appreciation of the dollar."

Trump has vowed to cut taxes for corporations, small businesses and large inheritances, according to USA Today. He has also said he would reduce regulations, repeal the Affordable Care Act, toughen up regulations with China and either scrap or heavily modify the Trans-Pacific Partnership and North American Free Trade Deal, while spending more on infrastructure and the military. Many economists and pundits question whether or not these moves would help or hurt the U.S. economy in the long run.

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Folkerts-Landau acknowledged that there are inherent risks involved, such as the possibility of poorly-implemented plans, trade wars, or the Fed having to raise interest rates too quickly, notes CNBC. However, the economist predicted that there is a higher chance of U.S. prosperity that would positively impact the growth around the world, even though the effects of this jump-start might take some time to kick in.

"This approach should produce a new order that will ultimately be more stable in the sense that 'good fences make good neighbors,'" Folkers-Landau said. "However, we do note that the uncertainty about the Trump administration's policies is still large, as is the reaction of those impacted by these policies."

Sources: CNBC, USA Today / Photo Credit: Michael Vadon/Wikimedia Commons

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