The trump effect: in the first year of his presidency, the US economy is gaining altitude

© AP Photo / Pablo Martinez MonsivaisЗдание the White house in Washington, USA. Archival photoThe trump effect: in the first year of his presidency, the US economy is gaining altitude© AP Photo / Pablo Martinez Monsivais

Saturday will mark the one year since the inauguration of the President of the United States Donald trump is perhaps one of the most controversial presidents in the history of the country, and although his career on the political horizon, experts estimate very ambiguous, the presidency trump the economy, analysts polled by RIA Novosti, characterize with a very positive perspective.

During the election campaign, trump faced a very strong opponent — a Democrat with the experience of former Secretary of state Hillary Clinton in November 2016, the citizens of America to choose not just between two candidates, and the mindset that the leader of the country should follow for the next four years.

Opponents preached the opposite approach in the field of economic policy. One of the most important differences with Clinton — the categorical rejection of the trump course on globalization.

Trade agreements

After coming to power, trump consistently began to implement its strategy, which resulted in his most favorite slogan — «America above all else.» Even if it would be worth break ties and promises of a better future within the framework of joint economic zones. One of the first victims was the agreement on the TRANS-Pacific partnership (TPP). Tramp for the output it has received a lot of criticism from former administration. In particular, the ex-Treasury Secretary Henry Paulson has condemned the us withdrawal from the negotiations and said that this is a gross mistake. Trump claimed that this agreement would bind us hand and foot, deprive Americans of jobs, besides «back door» this agreement will benefit China.

In the TRANS-Pacific partnership planned creation of a free trade zone in the Asia-Pacific region. On the Pacific countries have 40% of the world economy and a third of world trade. China is not a party to the agreement, and many experts have noted that the TPP is aimed, on the contrary, against Beijing. After the US withdrawal from the TTP Chinese experts talked about the fact that their country should occupy the vacant place. However, while no reliable evidence that the American economy has lost from this decision and lost to China, no.

Further, it was expected that trump would bring down his wrath on another agreement — the free trade area NAFTA, which was ratified in 1994. He was joined by close neighbours of the United States — Canada and Mexico.

Trump, according to his campaign speeches, was convinced that the Americans only lost from this agreement because the largest US companies began to transfer their production overseas, especially to Mexico, which is cheap labor and weak unions.

However, the President has promised the leaders of Mexico and Canada that the United States is not going to be coming from the North American free trade area, but agreed with them on the implementation of the new NAFTA talks. Discussions on this issue continued for just under a year from April 2017. Another round with the participation of trade Ministers of the three countries expected next week in Dallas.

«Some commentators tend to think that America will extend the agreement. Just tough rhetoric she bargains for themselves the best conditions, associated with lower tariffs. Others believe that trump should announce the withdrawal from NAFTA,» — said in an interview with RIA Novosti, the portfolio Manager Principal Investors Kyle Shostak.

He points to the disappointment and other participants in NAFTA. For example, Canada has recently filed a lawsuit in the WTO against the United States because of a number of measures to protect American manufacturers. «Maybe this explains that canadian experts expect the negative scenario — out of the agreement,» — said the economist. But Shostak himself more inclined to the version that the US will not go for it. The risks are too great for the American economy, he said.

«Further, the situation in the external economy depends on it (NAFTA talks). Together this trio of nearest neighbors takes up a huge chunk of the global economy. Is this shopping block is very large in size. And the results of the review of this agreement will affect the US economy in the future,» he adds. According to him, the success of the United States in the negotiations on NAFTA will depend on the next step — negotiations on the Transatlantic partnership.

The transatlantic trade and investment partnership (TTIP) — a free trade area between the US and the EU. Europeans initiated this project in 2013. If such area, which jokingly called economic NATO, will indeed be created, it will bring together almost half the world’s GDP and two thirds of international investment. The Europeans hoped to revive the trade of the European Union, tired of austerity measures and numerous regulations. However, even the previous US administration of President-globalist Barack Obama to implement the project failed due to disputes about the US role in this process. Europe has shown in these negotiations the independence and began to defend their interests. The administration of the tramp pulled the project indefinitely and, apparently, it is all forgotten. But Shostak believes that for a bit.

«The transatlantic partnership is perhaps even more important (than the TPP, which the US refused). Because links older partners. Unlike new partners in the Asian region, of course, (freezing this process) will have some negative psychological effect. But while the priority for foreign economic bloc of the us administration is NAFTA. Many will study this example and see how America behaves, and will use this experience to negotiate the TTIP,» says Shostak.

He points to the fact that Trump was able this year to conclude a number of successful bilateral agreements. For example, said the deal with Saudi Arabia for $ 110 billion in the supply of aircraft and military equipment. «This will give additional impetus to the production and add jobs in the military sector of the economy» — emphasizes the interlocutor of the Agency.

Another subtle point that is indicated by Shostak, the prospect of a revision of the bilateral agreements with the world’s second largest economy — China. «Here, in my opinion, the parties are in such a state of parity. The first battle took place — the rhetoric is gone. All said something negative and positive,» he notes. What happens next depends on bargaining power and forces of the parties, which is also a certain intrigue for economists, the expert concludes.

On Christmas eve, trump signed a law on tax reform. It is this reform — the main, perhaps his economic victory. This reform will be the largest in the United States since 1986. Its cost is estimated at $ 1.5 trillion. They are designed to return us home global company, it comes as trade and financial flows.

It provides tax reduction on corporate profits to 21% from 35%. The main objective of this reform was the return on investment directly in the us economy, which was limited due to high taxes for corporations, preferring to invest in more competitive foreign markets.

Indeed, a number of companies actually following the signing of the trump reforms announced huge investments in the U.S. economy. In particular, the American Corporation Apple announced that it is investing in American manufacturing more than 350 billion dollars over five years to support the national economy and create new jobs.

«The immediate vision trunovskogo law embodied in the tax reform. It is really fundamental and interesting for several reasons. Though, because of the kind of global revision of the tax code occurred (President Ronald) Reagan,» continues Shostak.

«We can say that trump doesn’t get what he wanted in terms of tax reform. In particular, have not been measures to reduce the tax burden for the middle class. But even the fact that trump the result is, of course, worthy of all praise. I see the return of big corporate money on American soil — they are now in Europe, mainly in offshore and reinvested in the same European markets. In Ireland in particular, where a large amount of money us tech companies, now according to these new rules they can go back to the States and work here. It will be a very positive influence on the involvement of the economy,» — said Shostak.

One of the biggest rating agencies S&P, analyzing the reform, noted in its review that the decision of the American authorities will lead to changes in ratings and «positive rating actions are expected to result from the sustained improvement of cash flow». At the same time, the Agency did not rule out that a negative scenario is also possible and will be associated with the increase in the cost of money and debts of these companies. Note that the cost of borrowing in the United States will continue to grow, particularly in connection with the change of fed policy, which is increasingly away from policy easing. That, in turn, was associated with the need to bring the US economy out of the crisis.

The Central Bank tightened

The Federal reserve raised the interest rate to 1.25-1.5% 1-1,25% in mid-December. Previously, the regulator raised the rate in June — up to 1-1. 25% in March — to 0.75-1% per annum. This approach is unusual for the fed. In 2015 and 2016, for comparison, the organization decided to increase once. In 2007-2008, the controller and is gradually lower until, until it reached its lowest level of 0-0. 25% in December 2008.

Policy tightening in monetary policy was associated with the growth of economic indicators and forecasts. So the forecast for 2018 by the U.S. GDP growth improved to 2.5% from 2.1%, inflation remained at 1.9 percent and unemployment is down to 3.9% from the previous forecast of 4.1%. In the long run, the fed expects U.S. economic growth to average 2%, unemployment at 4.7% and inflation at around 2%.

«If the Obama administration maintained a policy of zero rates, was satisfied that these rates, when trump started the policy. The immediate cause of this increase is that the economy has reached a point that she is already able to absorb the inflationary shocks well, plus the stock market has increased by 30%,» continues Shostak.

«All this caused a reaction by the fed began to raise rates, and the trump factor is also observed. Even the fact that the decision was made to change the fed, not really affected the market — the news quickly absorbiruyaci», — said the expert.

Recall, trump breaking with tradition in his first term has replaced the head of the fed Janet Yellen on another member of the Board of governors of the Federal reserve — Jeff Powell. Recently, his nomination passed on a vote by the full Senate. Analysts expect that this nomination will be approved in the near future he will assume his duties.

«The new appointment looks very good, a good appointee, sees that the receiver Yellen will continue her in that year, policy — rate hike. The market is now looking positively to this new appointment», — the expert continues.

Hope for deregulation

The trump effect: in the first year of his presidency, the US economy is gaining altitude© Photo : Mercedes-BenzДетройт on wheels: auto show once again breathed life into a «dead» city Seconomic — the sphere of the obvious achievements of the trump. «The liberal media not talking about the economy, meanwhile the economy was in excellent shape during the first years of the tramp», — told RIA Novosti lawyer, ex-Senator of the legislative Assembly of Pennsylvania Bruce marks. Note that Russian President Vladimir Putin at the annual press conference noted the merits of the trump in its economic policy.

Indeed, economic growth in II-III quarters exceeded 3% per annum — though it is not up to the promised trump 4%, but shows a quite rapid and sustainable growth. The unemployment rate fell to 4.1% (from 10% in the midst of crisis, 2009). For exchanges the first year, trump was marked by excessive optimism: the S&P 500 index increased by almost 25%, NASDAQ by 30%.

«The stock market fluctuated, when was held the election campaign. Many in the market had fears associated with the possible entry of trump’s office. Analysts tried to take into account the failure of the tramp from a more active international policy. The negative pulse that would trump politics on trade agreements,» says Shostak.

The trump effect: in the first year of his presidency, the US economy is gaining altitude© RIA Novosti / Ilya Petliurite in fotobounce told how Russia and China will oust the US in the global economy», All these fears did not materialize, and even before the inauguration was transformed into a very strong and rapid growth of the market. Here, certainly, the impact trump and his policies the most direct, I believe his story with the election with the announcement of his policies had a direct impact on rapid growth. The market at the time of the election day was at a level of 2140 (S&P) and now — 2794 points. The market grew by 30%, this is unprecedented growth for a developed market for the year», — the expert continues.

«Trump gave the economy a hope for deregulation in Finance, infrastructure, spending and taxes,» — said RIA Novosti the chief economist of Smith’s Research & Gradings Scott MacDonald. And he adds: «It has become a huge incentive for the stock market, which received positive effects from the growth of corporate earnings.»

«But the main achievements and stress tests yet to come in 2018. They will depend on the progress in implementing tax reform. Thus, this year we’ll see whether reality trump statements,» — he concluded.