The economic consequences of Donald Trump

By The Economist online

FROM late January, Donald Trump will have all the authority of the American executive, and the support of a unified Republican Congress, behind him. He will, therefore, be in a position to deliver profound and lasting change. The near-term economic effect of a Trump presidency is perhaps not of foremost concern to vulnerable racial and religious minorities in America, or to nervous Nato allies in eastern Europe. But the economic consequences of Mr Trump’s presidency could be enormous, and costly.

In the short run, the market reaction will receive most attention. Mr Trump will not be president until early in 2017, and so it falls to markets to anticipate, and price in, expected policy changes. Stockmarkets are set to open down today, and the election could presage a longer slump if investors feel that the uncertainty generated by Mr Trump’s victory will harm growth and corporate profits. But volatility, rather than a bear market, might be the more probable outcome, given the lack of clarity as to what Mr Trump will prioritise in office. Bond prices will probably wobble a lot as markets seek insurance against risk. Normally, American bonds are the world’s great safe haven….

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Category: Business and finance, Free exchange

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