Investors have been anxiously waiting for Trump's budget proposals, to see if the fiscal shock they have been waiting for has any chance of materialising into a real deal. A big step came on Tuesday, when the government presented its budget for the 2018-2027 period. But, as with everything else in Trump's presidency, the document seems highly controversial, as the economic assumptions on which it is grounded have been pointed out by many as being highly unrealistic.
According to the budget projections, the U.S. economy is expected to operate with real growth hovering 3% and the unemployment rate below 5%. Those figures contrast with predictions made by every other institution, including the FED. But, even if such healthy growth were possible, the government failed to convincingly explain how such growth is going to be achieved and maintained for so long. Trump and Mulvaney (Office of Management and Budget Director) will find it very hard to convince Congress about the budget assumptions and even harder to overcome the apparent incongruence of recording an improvement in the budget due to the feedback effects expected by a tax cut, without recording any decrease in tax receipts due to the same cut.
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