What Would Trump’s Presidency Cost the U.S. Economy?

Donald Trump says that his economic vision is that “all economic policy must be geared towards making it easier to hire, invest, build, grow and produce in America – creating a level playing field for our workers and businesses in global competition, and creating jobs here, not overseas.” He puts this into five categories, very briefly summarized below:

  1. Tax reform- lowering taxes for everyone
  2. Regulatory reform- repeal many business regulations and pause any new regulations
  3. Trade reform- narrow the U.S. trade deficit and place high tariffs “to countries that cheat”
  4. Energy reform- lift restrictions on American energy
  5. Other reforms- repeal Obamacare, increase infrastructure, childcare, reduce homicides

According to a recent report by Oxford Economics, if all of Trump’s proposed policies are implemented, it could erase as much as $1 trillion off of the forecasted U.S. economy in 2021. After two years of his policies, economic growth would slow to about 0.3 percent annually. That would be the worst pace since the recession ended.


Trump’s trade reform policy includes imposing tariffs on goods from China and Mexico. Additionally he wants to remove large numbers of undocumented immigrants from the United States. By imposing high tariffs on Chinese and Mexican goods, it could also have large impacts on other countries. Jamie Thompson, head of macro scenarios at Oxford Economics, argues that Trump could likely hurt the workers that he says he is going to help in the manufacturing sector. A 35% tariff on Mexican goods, like cars and air conditioners, would negatively impact the American economy because almost half of the parts in those cars and air conditioners come from U.S. suppliers. Therefore, U.S. manufacturers could lose customers if the U.S. imposes a tariff on the Mexican products that they contribute to.

Similar stories came from denim manufacturers in South Carolina. They send a significant amount of denim to Mexico to be manufactured into jeans that are then sold in America. NAFTA, which Trump wants to renegotiate, is critical to keeping these types of manufacturers in business. These manufacturers are also large employers. The denim plant, run by Rich Turner, in South Carolina alone employs 2,700 people. Oxford Economics forecasts consumer spending to decline by 4.4% over four years in Trump’s plans are initiated. Even the price of groceries, a basic necessity for all Americans, rich or poor, would increase with tariffs placed on other countries goods.

In addition to Trump’s specific economic policies that could slow or even reverse economic growth, the mere shock of him winning the presidency would affect confidence in the United States worldwide. Confidence and communication about the economy have a huge influence. Even countries and businesses that are not directly impacted by Trump’s policies would react. Weakened confidence in the U.S. economy “would most likely result in the scaling back of business investment plans, accompanied by the postponement of major household purchases,” according to Oxford economists. A Trump victory would likely result in economic turbulence that would be felt worldwide.








Millennials, The Renter Generation

Millennials are the largest generation in America’s history with over 92 million people and coined as the “renter generation.” With this influx of people, more Millennials are staying home and if they leave, they are renting not buying houses. So what components make up the Millennial generation and what does this mean for the housing market?

Let’s break down the Millennials and see what makes them stay home longer and why. From 2005 to 2010 there has been a three percent increase in Millennials living at home. Some of them graduated during the recession and the housing crash and their perspectives have shifted. Pew Research cites that they are more burdened with student debt than any other generation but are excited about their financial futures. They want to be mobile, save money and start the large life decisions at a later age than previous generations. For example, Millennials are waiting to get married. The median marriage age was 30 in 2010. Often times, this means that buying a house and starting a family is also a priority later in life. However, buying a house isn’t the only thing Millennials are putting off.


Image from Goldman Sachs

Car ownership and purchasing high-ticket luxury goods have also slowed. With the enhancements of technology such as Uber and rideshare programs, there is less of a need to buy cars. Millennials believe that if they can rent something or use a service, they can save more money.

Sharing not owning is the tagline for this generation. Over 60 percent of all Millennials are interested in renting over owning—this applies to all goods and services from clothing, music and homes. This type of “sharing economy” has caused companies like Rent the Runway, Spotify and Airbnb to rise to success. Seen as yet another opportunity to save, renting is clearly the answer for everything for this generation. Not only does it give them an opportunity to try new things, but they are also not tied to those items and have more freedom in the future. This is the key to why they rent— it allows for more mobility.

With all the new technology in place, mounting student debt and a need for freedom, it’s no wonder the housing market is seeing a loss. According to a new report, home ownership has fallen since the financial crisis in 2009 with a huge drop in the Millennial generation alone. Homeownership has drastically dropped since 2004. More recently, CNBC stated that home ownership rates for Americans under 35 have dropped from 39 percent in 2010 to 34.1 percent in 2016. This could be bleak for the future of housing because peak home buying years are 25 to 45-years-old. However, the mere size of the generation and aspirations to settle down at a later date could mean a delay in the surge of housing.


Image from CNBC

Many wonder if Millennials are a renter generation, will they ever buy a house? Right now, it’s unclear. According to a study by Trulia, 93 percent of Millennials are interested in purchasing a home some day. With a premium on freedom, they want to live in trendy cities where home are often out of reach financially. So where do we go from here? Financial institutions need to work with Millennials and engage them in the importance of saving money. Banks also need to talk about the importance of credit and work to make mortgages more accessible to younger borrowers who might have a smaller credit history. Hopefully one day they will invest in a home but for right now, the number of Millennials will only rise.


Image from Goldman Sachs

Ants in The Prosperous Era

Last week, an article titled “Ants in The Prosperous Era” went viral on WeChat and Microblog, China’s most popular social platforms. All of a sudden, we all know that a woman named Gailan Yang killed her four young children behind her small, mud-brick house in a poor northwestern Chinese village in Gansu Province with an ax and the woman drank pesticide to kill herself later. Gailan’s husband who earned a life hardly outside the village with no more than $20 a day of income committed suicide after learning what happened.

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      (Gailan’s bedroom)


Over half of the population is under the poverty line in the village where Gailan struggled to live since she got married at the age of 19. According to the article, qualified as exceptionally poor, Gailan spent her days working in the fields “hopelessly.” Gailan took care of her four children in this 10-square-meter wind-blown dangerous house. What’s worse, all of her four children could not be registered with a “Hukou,” official residential permit in China, which means the children could not enjoy the country’s social welfare benefit.

“If there’s no incident like Gailan Yang killing her whole family, who would believe that these disadvantaged people and groups still exist in this prosperous era?” questioned the author, a well-known commentator.

As the world’s second-largest economy, China is among the world’s worst in income inequality. The country’s poverty rate dropped from 88 percent in 1981 to 11 percent in 2014, according to the World Bank.


Yet more than 70 million people in China still live below the poverty line, according to the National Bureau of Statistics, and income inequality is becoming larger and larger. The richest 1 percent of China’s households own a third of the country’s wealth, according to a recent report by Peking University. The poorest 25 percent of Chinese households own just 1 percent of the country’s total wealth, the study found.


Gini coefficient is a widely acknowledged measure of inequality that takes into account income distribution among residents of a country. The higher the Gini coefficient, the greater the inequality is. 40 or 0.4 is the warning level set by the United Nations. As it shown in the graph, China’s Gini coefficient rose to 49 in 2009, from 32 in 1990(the number varies among official statistics and organizational statistics). According to China’s official statement, China has made a great progress in combating inequality, making the lowest number of Gini Index in 2015. However, the number is still expected to be larger in reality.


Among Asian countries, China has ranked the first in earning Gini points speedily according to IMF. This May, IMF warns of growing inequality in India and China. IMF points to the problem with redistribution of incomes as high growth rates are not reducing inequality.


“When a person commits a crime for bread, then society is to blame,” one user wrote on Weibo, China’s version of Twitter. Although it’s discriminating to call people ants in the article, the family killing does shock the whole China’s society and raise an alarm to the abnormal economic development in current China.