Trump's objectives: boosting economic growth - Nomura

Analysts at Nomura explained that boosting economic growth is one of Trump’s primary objectives.

Key Quotes:

"Steve Mnuchin, Trump’s choice for Secretary of Treasury, has said that he believes that the economy can grow 3- 4% on a sustained basis. As our forecast suggests, we are skeptical that this objective can be achieved."

"Over the next couple of years, Trump and the Republican Congress will pursue expansionary fiscal policies (primarily through tax cuts) that would boost aggregate demand, but the effects on growth are likely to be modest, in part because of a more aggressive Fed."

"Forcing the Fed’s hand is the fact that we don’t expect any material change in aggregate supply from Trump’s policies (in fact, his immigration policies may reduce aggregate supply). In our opinion, the key issue in the near term is how changes in fiscal policy are likely to affect aggregate demand, i.e., fiscal multipliers."

"Over a longer horizon, what is likely to matter is how Trump’s policies on trade, immigration and regulation affect aggregate supply."

"How financial markets and the Federal Reserve respond to this mix of immediate and longer-term factors will also affect how the economy evolves in coming quarters."