Moody's Analytics analysis: Trump presidency would 'significantly' hurt economyBy NOLAN D. MCCASKILL
06/20/16 10:15 AM EDT
Donald Trump’s presidency would “significantly” weaken the country, driving the U.S. into a “lengthy recession” with nearly 3.5 million job losses and a 7 percent unemployment rate, according to a Moody’s Analytics analysis released Monday.
The analysis examined the presumptive Republican presidential nominee’s economic plans at face value, based on interviews, speeches and his campaign website. The authors of the report, however, warned that quantifying the real estate mogul’s economic polices “is complicated by their lack of specificity.”
“Broadly, Mr. Trump’s economic proposals will result in a more isolated U.S. economy. Cross-border trade and immigration will be significantly diminished, and with less trade and immigration, foreign direct investment will also be reduced,” Mark Zandi, Chris Lafakis, Dan White and Adam Ozimek wrote in the report.
His policies would also diminish the country’s growth prospects, grow federal government deficits, increase the nation’s debt and finance his “mix of much lower tax revenues and few cuts in spending” with “substantially more government borrowing.”
“Driven largely by these factors, the economy will be significantly weaker if Mr. Trump’s economic proposals are adopted. Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office,” the authors wrote. “By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%, compared with below 5% today. During Mr. Trump’s presidency, the average American household’s after-inflation income will stagnate, and stock prices and real house values will decline.”
The report also determined that Trump’s plans would hit the middle class the hardest while high-income earners would benefit the most from his tax breaks.
“Everyone receives a tax cut under his proposals, but the bulk of the cuts would go to those at the very top of the income distribution, and the job losses resulting from his other policies would likely hit lower- and middle-income households the hardest,” the report said. “The decline in wealth caused by weaker stock prices and housing values would be felt by all households.”
“Even allowing for some variability in the accuracy of the economic modeling and underlying assumptions that drive the analysis, four basic conclusions regarding the impact of Mr. Trump’s economic proposals can be reached: 1) they will result in a less global U.S. economy; 2) they will lead to larger government deficits and more debt; 3) they will largely benefit very high-income households; and 4) they will result in a weaker U.S. economy, with fewer jobs and higher unemployment,” the report stated.
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