The outlook for the U.S. economy in the next 12 months is a picture of low but steady growth, at least according to U.S. Treasury Secretary Steven Mnuchin. The Treasury Secretary says his department is predicting that it will take the American economy two years to reach an annual growth rate of 3%(of full year growth). This would fit with the post-financial crash pattern for the American economy, which has not grown faster than 3% in any year since the end of the last recession in mid-2009, almost a decade ago.
But storm clouds are gathering on the horizon for the U.S. growth in the first quarter of the Trump presidency has been disappointing, with the first three months of 2017 seeing the weakest first-quarter growth in America in three years. But analysts blamed a mild winter and higher than usual inflation for depressing consumer spending rather than administration policy. But Mnuchin argues that a combination of planned regulation relief measures, tax cuts and a renegotiation of international trade deals which the Trump presidency has planned will see full year growth rise to 3% by 2019.
Opinion is certainly divided over how effective the administration’s plans will be. Critics generally believe they are not ‘revenue-neutral’ and will fail in their objective to get U.S. multinationals to repatriate their profits back to America. If this is the case then the U.S. budget deficit will again start to yawn alarmingly open as Trump struggles to combine implementing his campaign promises on increased infrastructure spending, a higher U.S. defense budget and his famous wall on the Mexican border with his plans to cut federal revenues.
Meanwhile experts worry that the controversial nature of the Trump administration has politicized analysis of the U.S. economic outlook for 2017 and sharply reduced the changes of bi-partisan cooperation on reform. Political opposition to Trump from Congressional Republicans on increased government spending and from progressives on his ‘tax cuts for the rich’ may mean that the White House struggles to pass its agenda. Gridlock in Washington will increase uncertainty about U.S. economic intentions and therefore depress growth in the final three quarters of 2017. All of which means efforts to boost the U.S. economy to 3% annual growth by 2019 could still flounder.
One ominous sign that all is not well in America is the news that Puerto Rico Governor Ricardo Rossello announced on Wednesday May 3 that he was requesting a Title III proceeding from the U.S. territory’s federal financial oversight board. Title III is an an in-court debt restructuring process akin to a U.S. Bankruptcy; the governor’s request comes a day after several large creditors started legal action against the territory’s government for defaulting on $70 billion worth of debts.
