ECONOMY US
Confounding the critics? President Trump is presiding over a steady economy to the surprise of many international economists
I
t has to be said that the election of Donald Trump was met by many economists around the world with bewilderment, if not outright dismay. Predicting anything in the US economy was about to become much, much harder. However, so far, things have carried on with the momentum they were showing before the election and the inauguration. And that process appears to be being maintained post the President’s first one hundred days in office. The best news for ordinary Americans in April was that unemployment fell to a 10-year low as 211,000 people joined the workforce. Trump was quick to claim credit for this but the process was more longterm. Indeed, in April one key sector – construction – reported that it had hired less workers that month and was intending to do so for the rest of the year. Still America’s economic growth is nothing to get too excited about – just 0.7% in GDP terms in the first quarter, following a more impressive 2.1% for the last quarter of 2016. However, this is also not seemingly Trump-related – most of the dip in America’s largest trading partners, 2016 Country
Total trade ($m)
EU (combined)
686,991
China
578,588
Canada
544,894
Mexico
525,110
Japan
195,466
South Korea
112,198
India
67,687
World Source: US Department of Trade
4
3,643,564
growth is thought to be related to consumer sales that dipped over the Christmas and New Year due to warmer weather (less wool jumpers and overcoats) and quite significantly reduced utility bills following the unusually clement winter. Most analysts expect around a 2% growth in GDP across the first half of this year though the new president has promised a significant 4% growth due to his programme of tax cuts for individuals and businesses, deregulation and tougher enforcement of trade agreements. Just how much of this legislative change will actually occur and what its impact on the overall wider economy will be should become evident by JulyAugust. Some analysts expect him to take credit for growth despite the ‘tailwinds’ of consumer spending, a robust stock market and pre-existing wage growth that should be enough to see the economy through to autumn. In this scenario it will be next winter when the decision about whether or not Trumponomics works
or fails will be taken. America also still has to live with the rest of the world, however much a Trump administration is keen for a return to economic protectionism and isolationism. America’s exports are looking relatively good, despite the general slowdown in China. However, this is largely due to the fall in the dollar lagging and will probably get tougher for exporters later in the year. This was already seemingly evident as recently as last March with decreases into both exports from the US and imports into the US. Sectors that remain strong for exports were technology, meat and consumer goods though fuel oil, commodities, heavy industrial machinery and airplanes saw falls. However, once again, the unpredictability around the Trump administration could change this scenario too – for instance, meat and agriculture exports were up but the president’s threat to completely tear up the NAFTA agreement would put that growing trade in jeopardy. ● maritime ceo