Hopeful Thing About Trump Is That He's Not President Yet, Economists Say

About the only hopeful thing that economists who were critical of Donald Trump before the election can say right now is that he isn't president yet and no one knows what he might do when he enters the White House.

"Mr. Trump's plans are not altogether clear, and I think that's clear to anyone, so we don't know exactly what his course is going to be," said William Poole, a senior fellow at libertarian think tank the Cato Institute and former member of the Council of Economic Advisers under the Reagan administration who told the Wall Street Journal before the election he would vote for Gary Johnson.

Poole, a former president of the St. Louis Fed, was joined in his criticism of Trump before the election by a group of 370 economists, including eight Nobel laureates, who signed a letter urging Americans to vote against Trump published just days before the election. Poole himself was not a signer. Advisers to previous presidents -- Republicans and Democrats alike -- openly opposed the real estate magnate. Many now stand by their concerns, though the uncertainty surrounding Trump's positioning that caused such consternation before the election now contains elements of guarded optimism.

Still, Trump has not wavered on trade. He has pledged to withdraw from the Trans-Pacific Partnership trade agreement soon after his inauguration. A transition team memo obtained by CNN revealed he will begin to reform NAFTA immediately and pursue cracking down on China. He has also remained focused on keeping American companies at home, saying he has had talks with Apple (AAPL) and United Technologies' (UTX) Carrier about building or maintaining plants stateside.

If Trump's plans are carried out, the United States will be picking fights with its top three trading partners -- Canada, Mexico and China -- said Ian Coxhead, professor of economics at the University of Wisconsin-Madison and a signer of the Trump letter.

"What will the United States gain by unilaterally changing the way it engages with major trading partners?" Coxhead said. "It's impossible to see how there will be any benefit, whether to U.S. workers and consumers, and it's easy to see how there will be both short and long-run costs to the United States."

Regarding other issues, Trump has given some mixed signals on what he plans to tackle early on in his presidency.

He spoke of rebuilding infrastructure during his victory speech but in an interview last week with the New York Times said it won't be "the core" of his first years in office. He outlined priorities for his first 100 days in a video recently released by his campaign, including lifting energy restrictions, addressing cybersecurity and investigating visa program abuses. He made no mention of dealing with illegal immigration, one of the pillars of his presidential campaign.

"The optimistic story is we don't know exactly what he will do," said John Michael Van Reenen, a professor of economics at MIT and was one of the signatories of the anti-Trump letter.

The American public appears to be split on what Trump is likely to do as well. A CNN/ORC poll released November 22 found 45% of respondents think Trump is very likely to repeal and replace Obamacare, but only about a quarter foresaw him as very likely to build a wall along the Mexican border or defeat ISIS, two of his major talking points on the campaign trail.

Trump has remained steady on his tax plan, promising "big tax cuts" and "big regulation cuts" as well. With Republicans in control of Congress, he's likely to get his wish.

Reducing the corporate tax rate could inspire U.S. companies to repatriate profits held abroad and perhaps spur activity in America. The effect of slashing taxes for the wealthy, as Trump and Congressional Republicans propose, depends largely on one's view of the world.

"Unless you think that there is going to be a huge trickle-down effect of cutting the taxes of the rich, which hasn't been experienced in the past, then what the tax cuts will primarily do is add to the deficit," said Van Reenen.

Martin Feldstein, chairman of the White House Council of Economic Advisers under Reagan who opposed Trump prior to the election, in a WSJ op-ed after the election argued Trump can reduce the tax rate without raising the deficit by eliminating deductions and credits for everything but charitable gift and mortgage interest.

A Moody's Analytics analysis made headlines over the summer with its prediction that Donald Trump's policies would drive the United States into recession -- if taken at face value. The analysis also outlined a separate scenario in which Trump is tempered by a Republican Congress. That scenario -- which is about to become reality -- forecasts slowed growth in jobs and GDP over the course of a decade but not economic collapse.

"My views have not changed," said Mark Zandi, chief economist at Moody's and lead author of the analysis. "The policies actually legislated may be different, but by far, nothing I've heard or seen would make me feel any different about his policy positions and what they mean for the economy and the outlook."

Trump on the campaign trail pledged to achieve 4% growth through his policies, which Zandi says is impossible if he sticks by his immigration and trade stances. "There's a lot of uncertainty here, but based on what we're hearing, I think the economy is going to be better near-term but weaker longer-term," he said.

If there is one thing Trump has constantly signaled on the campaign trail and as president-elect, it is unpredictability. And so, those who spoke out against him before the election now view him with a watchful eye.

"One thing that could result in is basically a legislative agenda and as a policy agenda that is set very heavily by Paul Ryan and the center of the GOP. That's an agenda which is predictable. You may or may not like it, but on economic policy, we have a pretty good idea of what Paul Ryan would do if he were the president," said Emily Oster, Brown University economist and another Trump-letter signatory. "On the other hand, Trump made a lot of promises to the people who voted for him, many of which would not be carried through on a Ryan agenda. And so, it's just very difficult to predict."

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