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Trump Seeks 4% Annual GDP Growth

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Donald Trump
  • Trump Seeks 4% Annual GDP Growth

President-elect Donald Trump’s policies aim to achieve annual economic growth of 4 percent, the high end of previous goals set by him and his team, according to the White House website updated as he took the oath of office on Friday.

“To get the economy back on track, President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 percent annual economic growth,” the website reads in a page titled “Bringing Back Jobs And Growth.” The strategy includes lower tax rates and less regulation, it says.

Another page reiterates pledges Trump made on trade policy during the campaign, saying the president’s strategy “starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers.” Trump is also “committed to renegotiating” the North American Free Trade Agreement.

The U.S. economy has expanded at an average annual rate of 2.1 percent since the last recession ended in June 2009. Economists expect gross domestic product to grow 2.3 percent both this year and next year, according to the median estimates in a Bloomberg survey. The last time U.S. growth topped 4 percent in a full calendar year was in 2000, at 4.1 percent.

Trump in September called for a “national goal” of 4 percent economic growth while also saying his plans would create an average of 3.5 percent expansion over 10 years. His Treasury secretary nominee, Steven Mnuchin, told lawmakers Thursday in his confirmation hearing that “we should be able to get to” a sustained rate of 3 percent to 4 percent growth.

Economists are largely skeptical that the U.S. can grow at such a pace for a sustained period, even with assistance from fiscal stimulus or other policies. The Federal Reserve sees the economy’s long-term potential growth rate at about 1.8 percent.

The 10-year target of 25 million jobs, which Trump announced in September, is also seen as a stretch, given that the labor market is already considered relatively tight. The most jobs ever created over such a period were the 24.4 million added in the 10 years ending in March 2001, according to data compiled by Bloomberg. The worst stretch was the decade through March 2010, when about 2 million jobs were lost.

Trump’s target indicates 2.5 million new jobs a year, which would exceed the 2.16 million positions added in 2016. Instead, analysts expect a slowdown: about 2 million jobs added this year and 1.8 million in 2018, based on median estimates in a Bloomberg survey this month.

“We will follow two simple rules: buy American and hire American,” Trump said in his inauguration speech.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.

The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

He said, “The key factor appears to be the (U.S.) currency.”

As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.

Also, the effectiveness of the vaccines can not be ascertained until wider rollout.

Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.

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Crude Oil

Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

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Oil

Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.

Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.

While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.

On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”

“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.

Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.

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Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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