The looming threat to Trump's booming economy

A sugar high — from tax cuts and other stimulus — is expected to wear off in the coming year, constricting economic growth.

By BEN WHITE 11/15/2018 05:08 AM EST

President Donald Trump, already in a grumpy post-midterm mood, faces a growing list of economic problems that could irritate him even more next year. Chief among them is a withdrawal from the economy’s sugar high.

Fiscal stimulus from the GOP tax cuts is likely to start running out. The Federal Reserve is expected to keep bumping up interest rates. And few analysts expect a divided Congress — facing soaring deficits and with its eyes on 2020 — to join hands and pass a big infrastructure package or sweeping middle-class tax cuts to keep the fiscal juice flowing.

The collection of all these factors, coupled with jittery investors already worried about trade wars and a global slowdown, could deny Trump the kind of big economic growth numbers he loves to celebrate. And they could undercut one of the GOP’s biggest current arguments: You may not love what Trump says or does, but the Trump economy is awesome.

“The first punch will be the lag effect of rising interest rates. Rates work slowly but they do work eventually,” said Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics. “And the second will be that by 2020, without a further package from Congress, the stimulus will be done. You put all these together and it’s a little like Wile E. Coyote running over the cliff. You look down and the ground you thought was under you suddenly isn’t there anymore.”

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https://www.politico.com/story/2018/11/15/trump-economy-federal-reserve-tax-cuts-deficit-trade-967501