LISBON ¨C What could Donald Trump¡¯s victory in the U.S. presidential election mean for the American and global economies? In a December 2016 commentary (titled ¡°The Trump Boom?¡±), I argued that despite concerns about Trump¡¯s personality and economic policies, it was entirely plausible that the United States could experience robust GDP growth during his presidency ¡ª albeit with a risk of higher inflation.
For the ¡°crime¡± of trying to be objective and suggesting that the U.S. economy might perform well under Trump, I was condemned by fellow economists and commentators, especially progressives. Many, including Nobel laureate and New York Times columnist Paul Krugman, instead predicted a global recession and an imminent stock market crash.
Although I would not go so far as to predict a stock market collapse, my outlook for Trump¡¯s second presidency is decidedly less optimistic. As in 2016, Trump is inheriting a strong economy, which he nonetheless insists on mischaracterizing as ¡°terrible.¡± But he faces a more challenging economic landscape than he did in his first term, regardless of his domestic policies.
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