President-elect Donald Trump might not crash the economy as badly as some people think, according to three economists at the Northern Arizona University and Alliance Bank Economic Outlook Conference Thursday.
NAU W. A. Franke College of Business professors Dennis Foster and Ronald Gunderson and investment adviser Elliott Pollack said they expected a number of big changes in policy, tax reforms and regulations in the first three to four months of Trump’s term and then things will slow down.
Trump could make a huge difference in the economy, Pollock said. He could spur greater economic growth with his plans to cut regulations, cut taxes, open up local gas, coal and oil deposits to production and spend on infrastructure.
Pollack doubted that Trump would be able to bring back manufacturing jobs to the U.S. Those jobs have been replaced by service jobs, such as retail, restaurant and administrative positions. They’re not coming back.
As long as Trump didn’t start a trade war with a major U.S. trade partner, the economy would probably continue to improve and maybe at a greater rate, he said. If Trump got into a trade war all bets were off.
Pollack said that the recovery from the 2008 recession has been a long one. Recessions don’t usually die of old age, but the older they get the more vulnerable they are to shocks and bubbles in the market that could cause a recession. Currently things are OK and if things are done properly the economy could continue to grow.
Pollack also hoped that Trump would back off his promise to build a border wall. The U.S. needed the labor provided by immigrants crossing the border for construction and other jobs.
Foster agreed and said that as long as Trump didn’t get in a trade war and didn’t pick a fight with the Republican Congress he could probably get most of his promises accomplished.
Gunderson added not messing with the Federal Reserve to the list. The Fed was designed to be independent of the political process and every time a politician has tried to order it around things have not turned out well.
The economy at the local level is actually doing better than the national economy, Gunderson said. There’s a building boom going on locally which is bringing in jobs. The medical and service industries are bringing in more diverse and high paying jobs. The tourism industry is growing and so is NAU.
“We’re very fortunate to be in a pocket of growth,” he said.
However, there are some areas of concern, Gunderson said. The city needed to something about highway congestion and the high cost of living was keeping the price of housing too high.
However, high housing prices did create an incentive for people to sell, which would eventually bring prices down, he said.
One of the reasons why the state and local economy isn’t improving more quickly is because the number of people moving to the state isn’t increasing as quickly as it was before, Pollack said. When people move to the state they generate a demand for services, which creates more jobs and draws more people to fill those jobs. But people aren’t moving, so the national, state and local economy is stuck.
One reason people aren’t moving is because millennials, people who are 35 years or younger in age, have delayed getting married, partially because of student loan debt, he said. When you delay getting married, you delay buying a house and having children, all of which spur economic growth.
However, this has caused the demand for apartments to increase dramatically, Pollack said. This is because millennials aren’t buying houses and Baby Boomers are moving out of their homes and into apartments.