Harvard economist Kenneth Rogoff predicts the U.S. economy will finally fully blossom and flourish once President Barack Obama leaves office.
President-elect Donald Trumps’ three-pronged catalyst of lower taxes, less regulation and more domestic spending could push gross domestic product well above the trend of the past eight years, CNBC.com explained.
"Yes, it still could all end very badly. The world is a risky place. If global growth collapses, U.S. growth could suffer severely," Rogoff wrote this week in an analysis for the World Economic Forum. "Still, it is far more likely that after years of slow recovery, the U.S. economy might at last be ready to move significantly faster, at least for a while."
Rogoff believes President-elect Donald Trump's prescriptions for growth likely will put a halt to economic stasis. The eight years under President Barack Obama have seen annual GDP gains of only about 1.8 percent, well below trend growth of around 3 percent.
"Those who are deeply wedded to the idea of 'secular stagnation' would say high growth under Trump is well-nigh impossible," Rogoff said. "But if one believes, as I do, that the slow growth of the last eight years was mainly due to the overhang of debt and fear from the 2008 crisis, then it is not so hard to believe that normalization could be much closer than we realize. After all, so far virtually every financial crisis has eventually come to an end."
But the new administration isn’t without risks – the most volatile being the president himself, Rogoff warns.
"If the new administration proves erratic and incompetent (a real possibility), dejection will quickly overwhelm confidence," he said.
But other respected economic voices are fully confident in Trump.
Veteran financial guru Larry Kudlow, who served as the Donald Trump campaign's senior economic adviser, predicts to Newsmax TV that the record-setting stock rally “may go on for years” because the market “likes what it sees” before the president-elect has even officially taken office.
Stocks could drop in a natural turn of events, but for the most part, get ready for more record-high stock-market finishes, he told Steve Malzberg on “America Talks Live.”
“The Trump rally may go on for years,” said Kudlow, a Newsmax Finance Insider, radio talk-show host and CNBC senior contributor.
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