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OCED positive on Donald Trump

By Charles Payne, CEO & Principal Analyst

"In the aftermath of the U.S. elections, there is widespread expectation of a significant change in direction for macroeconomic policy."  (OECD Report)

Not far from Trump Tower in Manhattan is the iconic statue of Titan Atlas holding up the world.   The statue caused uproar when it was unveiled as many liken it to the musing of Italian dictator Mussolini.

Some think it also influenced Ayn Rand, whose Atlas Shrugged, is a cornerstone of libertarian thinking.  I think it’s appropriate because of the news mostly missed on Monday.

The Organization for Economic Cooperation and Development made positive comments about Donald Trump and his policies, not only helping the United States but giving the world a shot in the arm.

Between tax cuts and fiscal policies, the OECD altered its economic outlook for the United States, which is likely to achieve less than 2.0% growth in 2016, along with the following:

  • 2017 GDP outlook, 2.3% from 1.9%
  • 2018 GDP outlook, 3.0% from prior 2.2%

The OECD, which had promoted fiscal prudence, is now on the Trump Train with respect to the positive economic impact from:

  • Infrastructure Spending
  • Personal Tax Cuts
  • Business Tax Cuts
  • Deregulation of Private Sector

The report cautioned that the impact of these policies won’t have an immediate impact, but it will set the stage for sustained growth.  On the other hand, the OECD expressed worry over “isolationist rhetoric” and a potential trade war.  (I agree that trade deals can and must be amended, but a full-blown trade war would have devastating consequences –even if we come out on the winning end of the skirmish.)

Moreover, in a dig at the Federal Reserve, the OECD made the distinction between efforts to drive economies through a fiscal policy versus monetary policy, saying that ”Governments should work to pass more legislation and rely less heavily on central banks alone,” echoing what I have been saying and writing about for weeks.

It should be noted; however, the next couple of years will see a competitive fiscal policy around the world with China contributing as much, if not more, in the demand for economic building blocks (commodities). 

Charles Payne
Wall Street Strategies


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