The stock market has been on a tear lately on hopes that President-elect Trump's fiscal plans will pump up the economy, but The Conference Board is less optimistic about a surge in growth once Team Trump takes control in Washington.
"I think the markets are perhaps running a little bit ahead of themselves because they are identifying the positive things that the Trump agenda might possibly and hopefully deliver to us, but not taking into account any possible negative effects that can occur," explained Bart van Ark, chief economist at The Conference Board. "If we focus just on the positive effects, which would be tax cuts and infrastructure spending, there are reasons to assume that the impact is going to be fairly limited."
The Conference Board released its global growth outlook, saying uncertainties and disruptions will lead to stagnant growth around the world next year. Global GDP is forecast to grow just 2.8% in 2017, and the U.S. will trail that, with an anemic GDP gain of just 2%, according to the forecast.
"The U.S. is growing about 1 percentage point slower in terms of its trend, compared to what we were doing say a decade ago. So we have a lot of catching up to do," explained van Ark. What's preventing GDP growth of 3% or 4% in the U.S. is a lack of business investment, he explained. "If private businesses spent more on things like digital transformation, and technology and innovation so that our companies also become a lot more productive, that could have a more positive effect on the economy," said van Ark. "But for that, you are really looking at a few more years down the road." van Ark also said it's too early to say whether Trump's policies will encourage such investment.