So is Trump right? There is a lot to be said about that. First of all, the president inherited this boom from his predecessor Obama. Then there is, and that also applies to the previous president, a substantial growth difference with the previous duration records of the American economy. The long boom in the 1960s had an average annual economic growth of 4.9 percent. The heyday of the 1990s produced an average of 3.6 percent economic growth annually. But the current period of continuous growth is tame, with an average growth of only 2.2 percent. It has been going well for a long time, but also very slowly. Last year, economic growth amounted to 2.3 percent. Trump’s new budget assumes 3 percent growth, but even his finance minister Mnuchin said last week that this is not being achieved for a long time.
Examining the Strength of the Trump Economy
In addition, the interest rate policy of the central bank is extremely flexible and experienced a remarkable tournure at the start of last year. The president of the Federal Reserve, Jerome Powell, bent an intention in less than two months to raise interest rates to lower them in an intention. That was a corn on the stock market mill, where stock prices had one of the best years since the Lehman crisis in 2019.
And then there is the budget policy itself. According to the new budget, the US budget deficit will amount to 4.6 percent of the gross domestic product. According to the International Monetary Fund, which uses a different definition, it even amounts to 5.5 percent. Such a high deficit is unusual after such a favorable and long economic boom. In its most recent publication, the Congressional Budget Office, the formally impartial mathematician of Congress, reports that the US budget is now on course for an endless series of rising deficits. At least until 2030, when the deficit will be 5.4 percent. The national debt will have risen by that time from 81 percent of GDP to 98 percent. And that is the American definition. According to international budget standards, the US national debt is already 108 percent of GDP. Except just after the Second World War, there was not such a series of budget deficits as those under Trump.
There are two stories in the U.S. economic growth. One in which the US is going through a renaissance, under the unorthodox policy of President Trump. With increasing employment, rising wages and strong stock prices. The Great American Comeback, as Trump called it in his State of the Union. But there is also another story in which the lifespan of the American economy is extended with equine resources. Just like in a horror movie, to dissolve rapidly in the event of death. It is unlikely that these two lectures will meet each other. Just like that, in current American political relationships, it seems to be the case with every other subject. Certainly in the election year 2020.
Are you looking to invest in stocks other than in the United States? Invest in Canada. Check out stocktrades.ca for the best stocks to buy in Canada.