As news of Donald Trump’s election made headlines across the globe, several media outlets turned to Terry professors to understand the implications for financial markets and public policy.
“Less gridlock in Washington. That’s a big deal. As the world changes, policies need to change, and gridlock has impeded that for a long time,” he said.
But the political change of direction means greater uncertainty and possibly slower economic growth initially, Humphreys said, as businesses, households and financial markets wait to see what Trump’s new policies will be on taxes, regulations and other issues.
The uncertainty “will dissipate,” he added. “If we get better policies, it could bring substantial benefits in the end.”
But Trump’s campaign promises on trade and global currency issues could result in trade wars and “a more isolated U.S. economy,” he said. “Importers and exporters have to be concerned.”
“I didn’t expect it to happen,” she said. “I checked [election] night when Asian markets were open and those were down, so if we would have expected that same sentiment to follow through when markets opened [Wednesday] morning I also would have expected them to be down.”
“One possibility is that the market anticipates the Federal Reserve to keep interest rates the same at their December meeting,” she said.
“My guess is that this new president will bring lower taxes,” he said. “That may translate to more revenues for companies or not… depending on how they spend their money.”