(FinancialPress) — President Trump made grandiose claims of tax cutting during his campaign, and now he‘s lobbying for it. However, it seems as if the U.S. economy will largely be unaffected by a potential failure of the plan. That is, at least, according to Bank of America Merryl Lynch‘s chief global economist. And with the institution‘s position as one of Wall Street‘s preeminent financial firms, those within earshot will listen.
The U.S. will do “just fine“, no matter which way Congress leans when deciding on the first major overhaul of the tax code since 1986 – according to Ethan Harris. The way he sees it, the pathway to steady growth is already paved due to the revived global economy, low interest rates and a very healthy financial system when compared to previous years.
In a report, he stated that “by some accounts, tax cuts are not only very likely, but they are also critical to continued strong growth.“ He continued: “By contrast, we not only assume no cut or reform, but we also expect solid U.S. and global growth anyway.”
Trump‘s perspective on the positive trend in stocks is that the market‘s responding favorably to his proposals. He feels a tax reduction will take both the markets and the economy to even greater heights.
If the plan fails, Harris does see it possible that the stock market will be negatively affected – at least for some time. But on the other hand, he believes that the effect it‘s supposed to be having in order for it to be enjoying its record surge is considerably hyperbolic.
He referenced the fact that, in the past year, a global “all-cap“ stock index has recorded gains of 20% – similar to an U.S. all-cap index. He perceives that the U.S. stocks surge is not only not isolated, but also not caused by Wall Street‘s enthusiasm for tax cuts.