Tax Reform, Trade Policy,

Financial Regulation, and

Natural Disasters

Boston, MA
November 2nd, 2018
 Trump Administration
 How are the policies of the
Trump administration impacting
the U.S. economic outlook?

 Is Trump lifting us “up where

we belong?”
Trump Administration
Trump Administration
 Impact of the Trump
Administration
• Fiscal Policy:

Spending plus tax cuts

• $1 trillion infrastructure plan(?)

• Boost in defense spending
 Trump Administration
• Tax reform

– Personal
• Lower tax rates
• Nearly doubles standard deduction
• Caps mortgage and SALT deductions

– Corporate
• Tax rate 35% to 21%
– Repatriation @ 15.5%
• Immediate expensing for small business
• Pass through income
 U.S. Forecast

Real After Tax Profits

(Billions of Dollars)
2500.0

2000.0

1500.0

1000.0

500.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Real After Tax Profits
 U.S. Forecast
Private Fixed Nonresidential Investment
(Billions of Dollars)
3500.0

3000.0

2500.0

2000.0

1500.0

1000.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Private Fixed Nonresidential Investment
 U.S. Forecast
Federal Budget Surplus
(Billions of Dollars)
0.0
-200.0
-400.0
-600.0
-800.0
-1000.0
-1200.0
-1400.0
-1600.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Federal Budget Surplus
 Trump Administration
• Much needed regulatory relief

• 22 deregulatory actions for

every 1 regulatory action

• Agencies have:
– Withdrawn 653 regulations
– 244 regulations made inactive
– 700 regulations delayed
 The Rules of the Game
Matter
• Federal Regulation and
Aggregate Economic Growth
by John W. Dawson and John J.
Seater
• Journal of Economic Growth
(2013) 18:137-177

Examined Economic Growth and

Productivity 1949-2005
 The Rules of the Game
Matter
• Results:

• Regulations have reduced real

GDP growth an average of 2%
per year.

• Real GDP in 2005 would have

been $53.9 trillion instead of
the $15.1 trillion
 The Rules of the Game
Matter
• Results:

• Productivity is impacted by
regulatory growth

• The conundrum of declining

productivity in the 1970’s
attributable to a doubling in the
number of pages of regulation.
 Trump Administration
• Trade policy a potential pitfall

• Threats of tariffs and other

trade barriers in response to
unfair trade practices and
currency manipulation

– Trade war happening?

 Trump Administration
• New administration has thus far
avoided SkyMall™ Policies

 Sky Mall™ Policy:

 An Expensive Policy that Fails to

Achieve its Desired Outcome
U.S. Forecast
 U.S. Forecast
Sky Mall™ Policies:

T.A.R.P.
Foreclosure Prevention Act 2009
ARRA of 2009
Affordable Care Act
Dodd-Frank
U.S. Forecast
U.S. Forecast
U.S. Forecast
 U.S. Forecast
Total Nonfarm Payroll Employment
(Millions)
155.0
150.0
145.0
140.0
135.0
130.0
125.0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Total Nonfarm Employment
 U.S. Forecast

Civilian Unemployment Rate

(%)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Unemployment Rate
 U.S. Forecast
Real Disposable Income and Consumption
(% Change Year Ago)
6.0

4.0

2.0

0.0

-2.0

-4.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Real Disposable Income Consumption
 U.S. Forecast
Automobile and Light Truck Sales
(Millions Vehicles)
14.0

12.0

10.0

8.0

6.0

4.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Auto Sales
Light Truck Sales
 U.S. Forecast
Real GDP Growth and Federal Funds Rate
(%)
10.0

5.0

0.0

-5.0

-10.0
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Quarterly Growth Rate Real GDP Fed Funds Rate
 U.S. Forecast

2016 2017 2018 2019 2020

GDP
% Change, Annual Rate 1.5 2.4 3.2 3.6 2.8

Consumer Price Index

% Change, Annual Rate 1.3 2.1 2.5 2.4 2.6

Consumer Sentiment 91.8 94.4 95.7 97.5 97.5

Consumption
% Change, Annual Rate 2.7 2.7 3.2 3.8 3.6
 Hurricane Impacts

• You cannot grow the economy

by destroying it

• Stocks vs. Flows in the

economy

• Employment impacts
Hurricane Impact
Employment
 Quarterly Forecast Publications
Available

Florida & Metro Forecast U.S. Forecast

Download at:

WWW.IEC.UCF.EDU
 Thank you
Sean M. Snaith, Ph.D.
Director
Institute for Economic Competitiveness
(407) 823-1453
Sean@SeanSnaith.com
WWW.IEC.UCF.EDU
www.facebook.com/seansnaith
Twitter: @seansnaith