(National Sentinel) Economy: While judging that 2017 was “surprisingly good” for the U.S. economy, financial analysts at Goldman Sachs believe that next year will be even better.
“2017 is shaping up to be the first year of the expansion in which growth surprises to the upside,” Goldman analyst Charles Himmelberg said, according to CNBC.
“We expect 2018 to deliver more of the same,” he added.
The U.S. economy grew 3 percent in the third quarter — a rate not seen at all throughout eight years of President Obama.
Himmelberg said that global growth, along with strong growth momentum in the U.S., the easing of financial conditions, global monetary policy remaining “highly accommodative by historical standards,” and the likelihood of fiscal stimulus in the U.S. should see the economy reach 4 percent growth in 2018.
“Heading into 2018, one of the top policy risks in focus for investors is the passage of US tax reform. A second policy risk which has fallen off of radar screens, but which is still active, in our opinion, is US trade policy,” Himmelberg said, noting the two risks are “potentially linked.”
Goldman Sachs has said it sees an 80-percent chance that tax reform gets done by early 2018. Already, the House has passed a $1.5 trillion tax cut and reform measure that faces a challenge in the GOP-controlled Senate.
That said, “if tax legislation fails to pass, it would be the second major legislative failure during President Trump’s first year in office,” meaning that the White House would likely try to score other victories with “a more assertive stance on trade and foreign policy.”
But as evidenced by the upward trend of the stock market — in the U.S., the S&P 500 has risen more than 14 percent in 2017 — policies enacted by President Donald J. Trump such as slashing red tape and bureaucracy are already having positive economic effects. That is also seen in the historically low unemployment rate and the rise in U.S. workforce participation.
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Also, Trump has pledged to renegotiate trade deals like NAFTA he says are putting American industries and corporations at unfair disadvantages.
Himmelberg said that if the GOP-controlled Congress can get tax reform done, Trump will be in a better position to redo existing trade deals.
“As goes tax reform, so may go NAFTA,” he said.
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