During his State of the Union address Tuesday night, President Donald Trump is likely to tout a strong economy and labor market as perhaps his greatest successes halfway into a four-year term tainted by a recently-resolved government shutdown and a probe into his administration’s ties to Russia.
Yet while Trump’s tax cuts and spending increases juiced growth in the short term, many economists say the benefits won’t last and will swell the deficit over the longer run, making it tougher to respond to the next recession.
Trump’s cuts to taxes and regulations also pumped up stocks, and consumer and business confidence, to the highest levels in recent memory. But his trade battles with countries such as China, Canada and Mexico have dented U.S. exports, business sentiment and stocks – all for an uncertain payoff.
Wells Fargo economist Mark Vitner believes the net result has been positive. “The economic recovery has spread to more parts of the country,” such as the Midwest and South, he said. “Manufacturers and small businesses know Trump has their back.”Read More