If American gets 4% growth, the world will permanently change
Take a moment and consider how the world will change if Trump's bite is actually as strong as his bark. The US could cut taxes, drop regulations and enact some genuinely protectionist measures.
In his inauguration he didn't sound like someone who was about to pivot until a statesman. So be it. We'll trade whatever is in front of us. The rules will change but we'll figure them out and try to stay ahead of the crowd.
But I can't help but wonder how the world starts to change if Trump succeeds. Surely other countries will follow. If a bit of protectionism works, why not a lot?
In all the change it will be tough to figure out which parts of the recipe made the dish work. Maybe the tax cuts and regulatory changes are what provides a bump in growth? But maybe it's the protectionism? Or maybe massive government infrastructure spending and a one-time repatriation tax holiday add a couple points to growth? Will the numbers even be trustworthy? Most likely is that it's the usual combination of demographics and other factors mostly beyond a government's control will be what determines the growth rate.
The danger is that everything is over-simplified in the re-telling. Even in hindsight no one can really piece together exactly why and how growth took place. So it will end up as a kind of propaganda battle of ideologies.
I'm just not quite sure which ones. But if it's protectionism, you can't help but believe it's emerging markets that have the most to lose.
