Bill Hampel, CUNA’s chief economist and chief policy officer, does a lot of presentations on the economy for credit union leaders.
And until Donald Trump upset the political world, he didn’t have to change it much from event to event.
“This was really easy until a week ago,” Hampel joked at the CUNA Community Credit Union Conference and The Federation 2016 Annual Meeting in Dallas.
So what does the Trump win mean for the U.S. economy?
Trump has some “incredibly different, bold, and radical proposals” in his campaign literature, Hampel says. But what will carry through from the campaign to governing is unclear.
Trump will likely have to work with a Republican-controlled Congress that might have different ideas about how to handle the economy, he says.
“It is far from clear that everything that was promised will be delivered on,” Hampel said.
But here is what Hampel will be watching:
1. Fiscal policy
Trump proposes a “dramatic Keynesian fiscal policy” and stimulus package that will cut income taxes across the board for consumers and businesses while massively increasing spending on infrastructure and the military, Hampel says.
The stimulus—although Trump does not like to call it that—would be larger than the package the Obama Administration put in place during the Great Recession.
Trump’s proposal, if approved, would speed up growth in the next two years, cause some inflation, and likely “get rid of the slack in the labor market,” Hampel says.
Whether that type of stimulus, which is actually supported by some liberal economists, will be supported by Republicans in Congress is unclear. In many ways the spending plan is an “anathema to them,” Hampel says.
2. Immigration reform
Trump’s proposals to restrict immigration could increase domestic wages and employment in the short term. But these restrictions would be a long-term drag on the economy because of the growing need for labor in the U.S, Hampel says.
If the U.S. does not see population growth from immigration, the economy could stagnate, he says.
“Think of Japan and where they were for a long time,” he says of that country’s slow growth.
Trump has signaled he’d like to fix the country’s negative trade balance with some form of protectionism.
Hampel said a protectionist stance would be bad for long-term growth in the U.S. economy.
“Protectionism just doesn’t work,” Hampel says. “If we institute some kind of trade protectionism, other countries are likely to follow suit.”
Hampel said the U.S. should have a good idea of which economic proposals may be implemented by summer. By that time, Trump’s overall governing priorities will likely be more well-known.