Donald Trump’s policy plans in his first days in office are likely to dominate headlines in the coming week, but the new president himself will also get a first read-out on the health of the U.S. economy.
And for all his call to make American great again, data should confirm that the economy is clipping along at a healthy rate even before Trump’s promised tax cuts and infrastructure spending.
While Trump has talked of a feverish first full day – with orders and notifications to withdraw from the TPP trans-Pacific trade pact, cancellation of restrictions of energy production and curbs on illegal immigrants – the economic diary is light.
Further details of a stimulus package, which could be watered down by Congress, could be the dominant economic event.
Other than that, a week before the monetary policy meetings of the Federal Reserve, the Bank of England and the Bank of Japan and a week after a European Central Bank sitting, the stand-out figures are likely to be first estimates for U.S. growth on Friday and for British growth a day earlier.
The U.S. economy is seen expanding by an annualized rate of 2.2 percent in the final quarter of 2016, easing from the 3.5 percent of third quarter as net trade turns negative, but with solid consumption growth and a reduced drag from the energy price collapse that hit investment.
“We’re seeing a lot of momentum in some areas of the economy,” said Laura Rosner, economist at BNP Paribas. “It’s a bit of a step down, but is still very healthy and really should support expectations for further growth and expansion.”
“It’s an important number but at the same time markets are focused on the outlook, particularly given all the potential policy changes,” she added.
Rosner, like other economists, sees U.S. growth accelerating this year and next, buoyed by the fiscal stimulus.
Harm Bandholz, chief U.S. economist at UniCredit, sees the effect of that being at the end of 2017, but says there is then a risk increased consumption hikes imports, leading to a call for growth-draining trade protection.
According to a Reuters poll in the past week, the top risk to U.S. growth is that Trump keeps his protectionist promises.