President-elect Donald Trump's policies have the potential to trigger a new age in U.S. economic growth that could serve as a global template, according to a Deutsche Bank forecast.
Gross domestic product growth would be double its current level under an agenda that cuts regulations across a broad swath of critical sectors, enacts tax reform that slashes personal and corporate taxes, and calls for at least $1 trillion in improvements for bridges, roads and other public projects.
"This policy mix has the potential of reigniting productivity growth and raising U.S. growth potential," David Folkerts-Landau, chief economist at Deutsche Bank, said in a report for clients. "While Trump introduces higher uncertainty, this is better than the near certainty of the continuation of a mediocre status quo."
The impact may not be felt immediately, but once the new agenda kicks in it will serve as a "game changer for the U.S. economy," Folkerts-Landau added.
In raw numbers, that would push 2017 growth to 2.4 percent and 2018 up to 3.6 percent. By way of comparison, the economy has grown an average of about 1.6 percent a year under President Barack Obama, the worst recovery since the Great Depression. Obama is the first president since Herbert Hoover not to see at least 3 percent growth for a calendar year.
The analysis also takes a more optimistic view of Trump's expected "America first" agenda when compared with other Wall Street views that have cited the danger of a potentially isolationist U.S. that starts trade wars with global competitors.
"This approach should produce a new order that will ultimately be more stable in the sense that 'good fences make good neighbors,'" Folkers-Landau said. "However, we do note that the uncertainty about the Trump administration's policies is still large, as is the reaction of those impacted by these policies."
