Yahoo Finance Quote of the Week: Trump’s Big Bet on Supply-Side Economics
FILE PHOTO: U.S. President Donald Trump displays his signature after signing the $1.5 trillion tax overhaul plan in the Oval Office of the White House in Washington, U.S., December 22, 2017. REUTERS/Jonathan Ernst/File Photo
“There has never been a President with policies so simultaneously bullish and bearish as Donald Trump! He is stepping on the economy’s accelerator and brakes at the same time. … Trump is making a very big bet on supply-side economics. The idea is that tax cuts will boost growth by boosting productivity, so inflation should remain subdued. That could work as long as growth isn’t weighed down by rising interest rates. If inflation does come back, then the latest supply-side experiment will end very badly indeed.”
– Economist and market strategist Ed Yardeni in a note to clients this week. Yardeni expects inflation to stay in check, but warns that deficits may be starting to weigh on the bond market — and notes that many on Wall Street now expect rates on 10-year Treasuries to rise to 4 percent. For more of Yardeni’s analysis on Trump’s bullish and bearish signals, click here.
