The US Economy: My Yearly Forecasts
"The US economy will continue to grow during the first part of the year, driven mostly by sectors that have benefited from the reallocation of resources due to the pandemic. If the incoming Biden administration does not impose greater restrictions on the U.S. economy, there will also be some recovery in areas that saw the greatest losses during 2020. The Federal Reserve’s easy monetary policy will continue, and for the time being, this will fuel increased economic activity."
We have never had so much economic data at our fingertips. But given leadership doubts and a new quasi-consensus on higher spending and low-interest rates, we have nothing close to a 20/20 vision of the 2020 economy. Balancing all these factors, however, and with none of the economic trends pointing to a crisis in the short term, the U.S. economy, like a slow-moving giant ship, will continue to push forward and ahead of most Western economies.
"People are policy, and the President’s inner circle has also moved towards individuals who prioritize the economy. One example is supply-sider and free-trader Lawrence “Larry” Kudlow. I still recall the week when he was appointed Chief Economic Adviser of the President. I was at an off-the-record meeting attended by representatives of pro free-market think tanks when a White House official asked the conservative audience, “Who would you like see replace Gary Cohn at the White House?” The overwhelming response was “Larry Kudlow.” A few days later, Larry was in the White House."
"The economy of the United States is poised for continued growth in 2018. But a potential conflict with North Korea and the deep state war against the President’s agenda can weaken the prospects."
"Apart from the above national security challenges and protectionist threats, most “reset” buttons for the United States economy point towards higher growth. This is mostly due to a major change in outlook as well as in the ideological bent of the designated cabinet members of the incoming administration. With the cost of regulation likely to fall in the U.S., and the cost of corruption likely to increase across the globe, the U.S. will become a more attractive place for investments."
"Respect for the rule of law in the United States has been declining, and, unfortunately, respect for private property continues to go down in the world. In the Fraser Institute index, the U.S. score in this front went slightly down (from 7.02 to 6.97), but it is way down from the year 2000, when it stood at 9.23. The United States is now 29th in the world. In the Heritage Foundation index, respect for property rights in the United States went down from 4th place in 2009 to 20th today, same as last year. In the rule of law index of the World Justice Project, (which ranks 102 countries), the United States is again in 19th place. Of the top 10 economies, four countries—Germany, the United Kingdom, Japan, and France—have better rule of law scores than the United States. Nevertheless, given the size and opportunities in its economy, the United States will remain as an attractive destination for foreign investment in 2016."
"A 2014 with market-based health care and immigration reform, with freer trade and a sounder monetary policy would lead to a very happy new economic year. But I am not so optimistic. I expect that president Obama and his administration will try to make their health proposal work at all costs. I doubt that think tanks will be able to make much progress against the Fed and the powerful interest that rely on their policies. Immigration remains so contentious, that progress will be difficult. The US-EU trade treaty has more chance for progress. Let’s celebrate anyway a new year and join the effort of think tanks trying to liberate the entrepreneurial spirit from so many government shackles."