Nobel laureate economist Robert Shiller says President-elect Donald Trump is showing Americans how to live large and love it.
"We used to be more into modest living," the Yale professor told CNBC, speaking about the years after the financial crisis. "Now people are thinking, '[that] doesn't work.' You know? You have to live big-league and you're on your way," Shiller said.
Shiller said the excitement is visible at Trump rallies and in the stock market.
Shiller's comments add to budding sentiment that America's new billionaire-in-chief — with his gold-plated penthouse, private jumbo jet and multiple mansions — could shift U.S. attitudes away from inequality and toward the 1980s-style aspiration and worship of wealth, CNBC.com explained.
That same strategy could also stimulate spending — particularly in housing, said Shiller, who helped develop the S&P/Case-Shiller housing price survey.
"Trump is a real estate man, right? He talks about living big, living large. I can imagine that this will boost housing demand as well, among at least those who are excited by Trump," he said.
Shiller warned that investors shouldn't get too comfortable, as the Trump rally could end up like Calvin Coolidge's run nearly a century ago. Coolidge was president during the Roaring '20s, before the decade-long Great Depression started in 1929, CNBC.com explained.
"It could be like ... Coolidge prosperity. It went for a while and it ended badly," he said.
To be sure, for the year:
- The Dow is up 2,508.78 points, or 14.4 percent.
- The S&P 500 is up 219.85 points, or 10.8 percent.
- The Nasdaq is up 455.28 points, or 9.1 percent.
The rally after Trump's victory was built on expectations of reduced regulations, big tax cuts and a large fiscal stimulus. Now signs are emerging from the Trump camp that harsher trade policies that could jeopardize the honeymoon are likely in the offing, and investors would be well advised to give those prospects more weight when gauging how much further an already pricey market has to run, Reuters reported.
By naming China hawk Peter Navarro as head of a newly formed White House National Trade Council, "the incoming administration is signaling Trump's campaign promises to revisit trade deals and even impose a tax on all imports are very much alive," Reuters explained.
Among the policies favored by Navarro is a so-called border adjustment tax. If implemented, economists at Deutsche Bank estimate the tax could send inflation far above the Federal Reserve's 2 percent target and drive a 15 percent surge in the dollar.
Harsher trade policies may not cause a full economic slowdown, "but I'd expect a localized recession in manufacturing and smaller gains in factory employment as well," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
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