According to Washington, the second presidency of Trump has started frenetically: mass shots in federal authorities, tariff threats against allies and enemies alike and having a republican household through a narrowly shared congress.
Economic leaders and company investors are confident that at least for them is fine. “The markets are not so concerned,” said Jason Pride, head of the investment strategy and research at the Glenmede Trust Company.
However, this could change, with a high impact on the markets and the economic prospects of the United States.
Investors expect that the tax reductions of the first term of office by President Trump, whose companies and the rich predicted, will be fully extended before the end of the year. Trade groups, including the Business Roundtable and the National Association of Wholesaler distributors, are confident that the extension will be maintained-this is not the case, since this would not be imposed on a tax increase, added Pride.
Nevertheless, arithmetic remains weak. The cost of extending the tax cuts can receive 4 billion dollars of 4 trillion US dollars over 10 years. This means that the congress is left to whatever money can save or collect and whose federal advantages can be reduced.
The bond market – at the dealer the risk of both inflation and an economic downturn – picked up on tariffs from Mr. Trump's boom -oriented negotiation. The bet is that the threats of import tax are more of a geopolitical instrument than an important sales drive, since the administration has shown the tariffs in budget discussions.
Some of the underlying calm come from the trust of Wall Street to Finance Minister Scott Bessent. He has convinced many analysts that the ultimate guideline suite, which comes from the White House, comes from Deutsche Bank, according to Matt Luzzetti.
This optimism is to make Mr. Trump's tax cuts for 2017 permanently not to be shortened as part of a cost -saving measure.
Several Republican legislators, including Senator Josh Hawley from Missouri, and eight house members, have repeated this. Some others want more spending on the table. With a republican majority of only a few votes in each congress chamber, however, it is unclear which legislative proposals will ultimately be a priority.
Many early sums of the savings costs have concentrated on the efficiency of the government of the government of the government, the initiative for the redesign of the German Musk.
For many in the business world, including a co -founder of Airbnb and the managing director of Palantir, Mr. Musk's cost reduction offers the prospect that previously excavation sources for large -scale waste and fraud versions could contribute to tax cuts in future budget calculations.
Mr. Trump and Mr. Musk said that the cost reduction efforts could save trillions. However, a savings of 55 billion US dollars claimed by Doge showed that mathematics with accounting errors, false assumptions, outdated data and other errors are affected.
“Since over 90 percent of government expenditure falls in the categories of non -discretionary, interest and defense expenditure, options for the significant reduction of the deficit without increasing taxes are very limited,” said David Rogal, a senior portfolio manager at BlackRock.
Several analysts of conservative think tanks have criticized Mr. Musk to mislead both the voters and the business people about where the majority of the federal expenditure is.
“If you are not mainly concentrating on the vast majority of the budget” for social security, medicare, medicaid, defense, veterans and interest payments to bonds, you should not be taken seriously as expenditure focus deficit-hawk, “said Jessica Riedl, Senior Fellow At the right -wing Manhattan Institute. True money is in these. “
Mr. Pride von Glenmede said that avoiding tax cuts could dampen economic growth this year. However, he also said that “option 2” for Mr. Trump and Mr. Bessent – considerable budget cuts – “would have similar economic effects over various channels because the government spends directly into the economy”.
Apart from the potential effects of health care and nutritional security in households, many economists believe and believe that the hundreds of billions of dollars for output cuts, which are proposed by some congress members – paired with high layoffs of the Federal Work – the employment growth and retail sales could slow down.
In groups of businesses, groups have argued for decades that federal budget deficits can and should not be treated by reduced expenses and not by higher tax revenues.
The new thing is that the population at the age of age has increased the mandatory expenditure for pension insurance. The military budget and the federal interest payments to bond believers are also growing.
On the campaign path, Mr. Trump made a number of populist tax promises to the voters. Promise to end tips or overtime, to reduce taxes for companies that manufacture their products in Germany and to eliminate taxes for social security payments to a wave of support from the population. But these initiatives, which would reduce the tax revenues by around 1 Billion US dollar, seem to fall from the priority list of many in the congress.
The White House and its allies “have” many ideas for expenditure and tax reduction and very few plausible, non-gimmicky salary subjects, “said Stan Veugr, Economist and Senior Fellow at the right-wing extremist American Enterprise Institute.
Kim Wallace, Senior Managing Director of the investment strategy company 22V Research, which leads the Washington Policy Risk team, said he was afraid that “at the end of this process, whether June or December, some numbers and the numbers and the numbers and the numbers will give the numbers and the numbers and the numbers. Then there will be a confrontation between supporters of fudging numbers in the congress and experts from the impartial committees of the congress, which formally “achieve” the income and expenses.
Such a confrontation could scare markets. A large majority of economists, analysts and asset managers in Wall Street believe that household mathematics is found from the notes that were shared with customers and financial chattering on TV.
“It will be difficult to fulfill the various goals of the administration – lower deficits, lower taxes and strong growth – through these guidelines,” said Luzzetti from Deutsche Bank. “An approach that is most likely in my opinion is to shorten the schedule for tax cuts.”
He said, “will mean more tax cuts at short notice, but a smaller sticker price” than the usual 10-year horizon, which said goodbye to budgets with slim majorities.
This would take place with the expectation of corporate America that the tax cuts would not expire, but would be extended again in later years, which would contribute to deficits.
However, the markets continue to focus on medium -term inflation and again on the path of interest rates. Traditionally, economists and managing directors Zölle consider inflation, since companies usually try to pass the tax costs on to consumers.
However, Mr. Bessent has expressed the trust that the expectations of inflation remain tame and that if certain tariffs are enacted, they stimulate a “one-time shift in the price level” and not further into inflation-one idea that is from one The main official of the Federal Reserve is supported.
Mr. Trump's recently announced plan for “mutual” tariffs against all trading partners – along with taxes on steel and aluminum imports and unsolved threats to Canada and Mexico – can still be confused global trade.
But the lack of details in the statement seemed to calm down borrowing from the lack of details. And the president stated that mutual measures would not be issued before the beginning of April.