Call me a Cassandra. Many have. But I am already dreading the downturn that must surely come at some point during Donald Trump’s presidency. Yes, the short-term sugar high of deregulation and tax cuts is already upon us. But, judging by history, the US is way overdue for both a recession and a big market correction, and the risk vectors in play with Trump make it more likely.
Why should I be so negative, so early? One can easily argue that there are many reasons to be optimistic that the strong economy President Joe Biden built and Trump will inherit will continue to expand. There’s positive real income growth at the moment, plus productivity improvements, an expected recovery in global manufacturing and rate cuts, of course.
Add to that things such as the coming Trump deficit spending, and the roll back of Biden’s antitrust policies, which will surely mean a boom in mergers and acquisitions, and you have a good case for another year or two of gains in US assets. This seems particularly so in areas like technology, finance (banks are gearing up for all that dealmaking), crypto (every time the billionaire investor Elon Musk tweets about Dogecoin it gets a boost), private equity and private credit.