by Matthew Pertz, News Editor
The International Monetary Fund issued its first projections of the year for the world economy as markets flail following the first major correction of President Trump’s term.
The fund anticipates strong short-term growth in the U.S. due to the GOP tax plan that passed in December, adding an estimated 1.2 percent to GDP growth as compared to projections before the plan. However, the group says those gains will be neutralized as the individual tax breaks expire, even as corporate tax cuts continue indefinitely.
The report also cites increasing U.S. oil output as an auspicious windfall for America but a harrowing development for the rest of the world. Javier Blas of Bloomberg Businessweek wrote, “The U.S. crowing from the top of a hill long occupied by Saudi Arabia or Russia would scramble geopolitics. A new world energy order could emerge…. Any celebration over this accomplishment ignores the evidence that such dependence on fossil fuels is no independence at all.”
President Trump often cites the stock market as an indicator of business prosperity during his presidency. While the Dow Jones Industrial Average (DJIA) has risen over 6,000 points since Trump’s election, the tide has been bucking back. After fourteen months of explosive stock growth, the market tumbled recently, losing nearly 2,000 points over three days. Feb. 5 was the worst day in the history of the DJIA, as it dropped almost 1,200 points.
Stock figures give little reason to worry. The NASDAQ and NYSE are only a flash image of the economy, similar to how a photo of a scene doesn’t contain the same context as a video of the same scene. After the rapid growth of 2017, a correction was bound to happen. The global economy is still strong, in spite of the temporary hysteria on Wall Street.
The worrisome economic figures lie below the surface. U.S. debt is over $20 trillion for the first time, and Trump’s first year saw over $668 billion in deficit spending. The government spent over $28 billion on interest payments alone. Without a significant reversal in the coming years, this trend will further diminish the value of the U.S. dollar as a currency and precipitate a global economic reckoning.
The Senate passed a budget on Feb. 7 with provisions allowing for an extra $200 billion in borrowed spending, indicating the debt crisis is still in the backseat of Congress’ priorities.
Around 120 economies saw year-to-year growth in 2017, marking the largest global rising since 2010. At face value, this trend is positive, but rapid growth tends to promote an equal and opposite reaction, as seen with the 2011 recession.
Photo via Pixabay