One of California’s most influential economists on Friday forecast that U.S. economic growth could reach as high as 3 percent this year if President Trump’s pro-growth policies prevail.
For a number of years the U.S. economy has grown at 2 percent, more than Europe but much less than China.
But she cautioned that Trump has championed both pro-growth and anti-growth policies. Tax cuts, deregulation and infrastructure investment will help the economy, she said, but import taxes and immigration restrictions could sting.
“A trade war runs the risk that everyone would see lower growth,” Reaser warned.
He echoed Reaser in warning that California’s major trading partners — Mexico, Canada and China — were concerned about Trump’s anti-growth policies and urged the business community to let Washington know of its concerns.
“There’s a lot of tension between what’s happening in California and in Washington, DC,” said Chiang.
Among other points Reaser made in her forecast:
- California — The state will add 335,000 new jobs as unemployment drops to 4.9 percent. “California remains the world hub of innovation.”
- San Diego — The county will see 30,000 more jobs in the sixth year of consecutive growth. Unemployment will fall to 4.1 percent.
- Mexico — The Mexican economy will grow by only 1.7 percent because of the falling peso and uncertainty about its future relationship with the U.S.
- Interest Rates — The post-recession era of ultra-low interest rates is ending, with the federal funds rate likely to reach 1.5 percent by year end.
- Dollar — “The dollar has emerged as the king of all currencies. Good news for consumers, bad news for exporters.”
The economy is in the midst of major changes in 2017, Reaser said, and cautioned that it was important for the U.S. not to turn inward.
“Economists probably should have done a much better job explaining the gains that globalization has brought,” she said.
Reaser said the U.S. has a “rare opportunity” to significantly increase economic growth. “Let’s not miss that opportunity,” she said.