US: Trumponomics not set to lift growth – Danske Bank

Analysts at Danske Bank expect US GDP to grow on average 1.9% q/q AR over the forecast horizon, as we do not expect any positive animal spirit effects to materialise and a major fiscal boost from Trumponomics is doubtful.

Key Quotes

“One should not get too excited about Trumponomics due to disagreements within the Republican Party. We maintain our longheld view that Trumponomics will come later and be smaller than pledged.”

“We expect the Fed to continue its hiking cycle (three hikes per year). However, it is in a difficult position, as the output gap is more or less closed already but inflation and wage growth are missing.”

“The combination of less faith in Trumponomics and the Fed signalling it wants to offset more expansionary fiscal policy is the main reason why we have lowered our GDP forecast for next year to 1.9% from 2.8% in our November update.”