Americans Are Not Buying But Trump Remains Optimistic on US Growth

Is the ‘America first’ agenda and protectionism by Trump doing anything good to the economy? Stats suggest that it could have, if only Americans were willing to buy. As of now, the citizens are not buying much, whether domestically made or imported. Retail sales have declined for two consecutive months now. A report from the Commerce Department suggests that shoppers are as cautious as 2015. A low level of expenditure will hurt the consumer driven economy of the nation.

Usa puzzle flag

US Growth Will Be Hurt

 

The predictions of the first quarter of 2017 are out and the economy doesn’t seem to be doing too well. US economy will register a growth of barely 0.5 percent during the first quarter. This sluggish number can directly be attributed to lower spending. Note that Trump had promised 4 percent growth of the economy, 8 times higher than the current numbers.

Is Trump wrong when he says that Americans are optimistic about the economy and US growth? When we check the figures from various surveys, we find optimistic consumers, investors, and businesses. However, this optimism vanishes when we consider the figures. The US is a highly consumer driven economy with more than 70 percent share of consumption.

Skeptical Optimism

 

Yes, Americans are optimistic but it looks like they are equally skeptical about the economy. Holding on to their money shows that they are still looking for more positive signs in the economy as per Edward Jones economists, this is ‘skeptical optimism’. The citizens want things to improve but it hasn’t been achieved yet. Because of this, they hold expenditure in search of greener pastures. They would prefer to wait for the economy to get better before spending.

Surveys represent soft data. They can measure ‘sentiment’ but they cannot measure ‘action’. In the American case, the sentiment is against the action. The stock market has fallen by 500 points after a 2,700-point post-election surge. Data shows that investors and forex traders are running towards safe havens. As a result of this, gold prices continue to go higher. Even the Wall Street does not wish to take chances. The entire economic participation of citizens (investors, businesses, and consumers) is on hold.

Trump remains optimistic about the economic sentiment revealed through surveys. However, these policies will take some time to implement. Moreover, there will be significant changes to these policies before they come into effect. It’s possible that the policies are to be significantly toned down. Americans know that predictability is not an attribute of this government. They prefer to wait and watch.