.. The yield curve in the all-important Treasury market tells a story of Trumpflation, a boost to both growth and inflation lasting a few years, with little long-term impact on the real economy...“People have pushed up their expectations about growth, but it’s more of a cyclical view than a structural view,” said Jan Hatzius, chief economist at Goldman Sachs.
.. The hope of a cyclical boom is reflected across equity markets, although the details of the new administration’s policies create more noise at a stock level... If Mr. Trump’s stimulus plans are implemented by Congress—a big if—they might end up boosting inflation more than real growth... One interpretation: Investors think the downward pressures on growth and inflation from the aging population are greater than any likely productivity gains from cutting red tape or improving infrastructure... but it’s also obvious that if investors truly believed Mr. Trump would deliver a big and permanent boost to growth or inflation, few would want 30-year bonds at a yield of just over 3%.
She was referring to our soon-to-be prime minister, Narendra Modi, who was running a campaign that skillfully melded the appeal of an outsider (he had once been a tea seller, he claimed) to the established order with the language of Hindu majoritarian politics, tapping in to existing prejudices against India’s Muslim minority.
.. When I heard Mr. Trump’s speech today in New Delhi, it was difficult to escape the echo of what we have already witnessed in India. In his inaugural speech, Mr. Modi talked of pulling the poor of India out of poverty. Many pundits, quick to look for hope where there was none, said that Mr. Modi’s speech reflected a new inclusiveness after the hatred of the campaign.
More than two years later, nothing has changed for the poor of India, but the bigotry that helped Mr. Modi ride to power has flourished.
On average, economists marked up their growth forecasts. The economy could expand 2.2% in 2017 and 2.3% in 2018, as a fiscal stimulus kicks into gear, up from about 1.5% over the past 12 months. Inflation is seen at 2.2% next year and 2.4% in 2018.
.. Most economists believe tax cuts, especially if not accompanied by spending reductions, would produce a short-term boost to economic growth. His proposals to increase infrastructure spending, if successful, could lead to a large boost in construction employment, with spillover effects for other industries.
.. “Now that Republicans are in control, there’s no concern about debt and deficits,”
But many share the assessment that inflation, in particular, has been too low in recent years, and that somewhat higher inflation would be a welcome development... Typically, the wealth effect of rising stock prices provides some lift to consumption and should provide some pep for the economy.