Dimmed Lights in Economic Crystal Balls

 

The effect of Donald Trump’s administration on our economy and housing market is approaching, and at the epicenter of several news outlets and economic reflections is the possibility of the gargantuan unknown. Some economists are predicting an economic downturn while others affirm that until measures are taken, we remain in the dark.

In a recent post, Beacon Economics articulates, “While the specific economic outcomes of a Trump presidency are largely unknown and will depend on what happens during the first few months of his administration, the new forecast points to several policies he campaigned aggressively on that could create enough of a shock to the economy to tip the nation into a recessionary period.”

Beacon Economics’ Founding Partner, Christopher Thornberg, added, “What we do know is that the potential upsides are limited, and the potential downsides are enormous—to the point that there is now a very real probability of a recession over the next two years.”

Selma Hepp, Pacific Union International Chief Economist, stated, “The outcome of the election brings something to the equation that nobody likes, and that’s uncertainty. Consumers get wary and businesses get wary, and investors will be pricing the uncertainty into their decisions.

“Additionally, Trump has not offered a plan for the housing market other than rhetoric. In the least, we know his administration does not agree with the current state of the Dodd-Frank reform and will try to change that. But how it all plays out—it’s too early to tell.”

Trulia Chief Economist, Ralph B. McLaughlin, emphasized that uncertainty is not a firm indicator of adversity, “A rocky road is no fun to tread on, but at least we know where the obstacles lay. Uncertainty tends to drives investors towards safe bets, such as U.S. bonds, which pushes down mortgage rates and makes borrowing cheaper.”

Where will the new presidential administration lead the economy? The next couple months will prove an interesting time as we witness the changing of the guards and enter the first period since 1928 that Republicans hold the White House, Senate and House of Representatives.

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