Tax cuts and deregulations are high on the agenda.
Companies should be in focus. I think that's a very good policy, trying to create a good business climate, says Robert Bergqvist.
He has also promised lower prices and lower interest rates. How he will manage that now.
There are a lot of words and threats from the incoming president's side. Trade tariffs, for example. It can be a lot of tactical negotiating, reasons Bergqvist, who is more concerned about the US government finances with upcoming budget negotiations in focus. Already gigantic budget deficits in a boom can be pulled further when major tax cuts are implemented.
Risk of Inflation
It risks driving up the already high American interest rates.
I believe it will have greater negative effects, not only on the US economy but also the rest of the world. If interest rates continue to rise, it will become even harder to finance the public deficits in the US. And when American interest rates rise, it usually also affects the global interest rate market, says Bergqvist.
Trump's collective economic promises – tariffs, tax cuts, and mass deportations of people who are in the country illegally, which risk creating labor shortages and driving up wages – can drive up consumer prices in a time of already good growth in the US economy:
There is a significant risk that inflation will simply lift off.
Contagion of Mortgage Rates
It will then spread.
It can affect mortgage rates here at home and also put the Stockholm stock exchange's valuation in motion.
But one thing we know is that Donald Trump is unpredictable. For economists and forecasters, it's about having high preparedness during his first 100 days on the new job.
From January 20, the game plan can thus change, says Bergqvist, who sees how financial markets are positioning themselves for an uncertain time.
One can see in various financial instruments that the market is taking precautions for now that it can get quite turbulent and volatile.
The US economy has developed strongly in recent years, generally better than most other Western countries, measured in GDP growth.
But it has come at the cost of a skyrocketing national debt, primarily during the pandemic. It currently amounts to around 36,000 billion dollars, 107,000 dollars per American, or 122 percent of the country's GDP.
Just the interest on the national debt is 1,000 billion dollars.
The budget deficit for the fiscal year that ended in October amounted to approximately 1,800 billion dollars, or 6.4 percent of the country's GDP.
Source: US Department of Finance
