US economists more upbeat, see Trump tax cuts extended: NABE
As President-elect Donald Trump prepares to retake the White House in January, the National Association of Business Economics (NABE) is more optimistic on the outlook for the U.S. economy.
"NABE panelists’ forecasts for economic growth in 2024 and 2025 are higher than their previous projections," said NABE President Emily Kolinski Morris, global chief economist at Ford Motor Co., in the group’s November outlook released Monday, which was surveyed from Oct. 29 through Nov. 8.
Ford is part of the 38 professional forecasters from companies including Wells Fargo Securities and FedEx, to name a few, that see gross domestic product rising by 2.7% this year, a jump from September expectations of 2.6%. For 2025, growth estimates rose to 2.0% from the initial 1.8% September estimate.
A combination of moderating inflation, more balanced risks and a Federal Reserve in easing mode are driving the improved economic sentiment.
"Panelists look for the Committee to gradually but consistently lower its target for the federal funds interest rate, cutting the target by a quarter-percentage point in December, followed by a full percentage point in 2025," they noted.
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Policymakers expect interest rates to end the year around 4.4%, falling to 3.4% by 2025, according to the Federal Reserve’s September projections. As for GDP, their estimate is for 2% growth for this year and next.
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Another momentum driver is the Tax Cuts and Jobs Act (TCJA), implemented by Trump during his first term and set to expire in 2025. Seventy-eight percent expect an extension while none expect an expiration.
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Many corporations and business leaders see Trump’s tax cuts as pro-growth and pro-business, including Scott Bessent, who the president-elect nominated for Treasury secretary on Friday. In an interview on FOX Business’ "Mornings with Maria" ahead of his nomination, he said these are critical to revive the U.S. economy and should become permanent.
"Whether I am on the inside or the outside, the extending or making permanent the Tax cuts and Jobs Act is the priority. Because if it doesn’t happen, this will be the largest tax increase in U.S. history, and I think we will unleash animal spirits when President Trump and the Republicans win tomorrow," said Bessent before Trump's election victory. "Then we need to make this permanent, and then we give businesses and households the confidence to really get on a glide path into the next four years."
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Ahead of election day, the U.S. Chamber of Commerce urged Congress and the incoming administration to keep the tax cuts in place.
As an example, during the heated 2024 presidential campaign, Vice President Harris, the Democrat nominee, promised to raise the corporate tax rate from 21% to 28%. Trump, who initially brought it down to 21% during his first term, is promising to take it even lower to 15%.
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"While the impact of a massive tax increase on individual Americans is clear, it is critical for policymakers to understand that the expiration of many pro-growth business tax reforms from the 2017 Tax Cuts and Jobs Act (TCJA) also will dramatically increase costs for families and customers, harm main street businesses, reduce take-home pay for workers, and result in the loss of innovation and American jobs," Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, said in a statement last September.