Wells Fargo’s latest economic forecast came out just two days ago, yet it looks strikingly similar to the one created just before the election.
“With everything that’s happened. There’s no change?” said Wells Fargo Securities global economist Jay H. Bryson this morning to more than 300 Berks County businesspeople.
While candidate Donald Trump proposed tax cuts, trade tariffs and spending cuts, those have not been established or legislated. So many of Wells Fargo’s forecasts are based on existing policy.
Bryson showed potential upsides and downsides to 2017’s economy at the Annual Economic Forecast Breakfast, hosted by the Greater Reading Chamber of Commerce & Industry at Stokesay Castle in Reading.
“I feel pretty comfortable saying that the U.S. economy in the upcoming years will do at least as well as it has been doing, and recognizing that there could be some upside potential and some downside as well,” he said.
Take the tax cuts that Trump proposed. They would increase disposable income and, potentially, consumer spending, Bryson said. That’s difficult to measure, though, and the cuts also would increase the federal deficit.
If corporate tax rates are cut, that potentially could lead to money sitting abroad to return to the U.S. and be invested, he said.
If tariffs were placed on imports, American producers would be at an advantage. But until industries can grow to meet new demands, prices on things such as apparel could increase, lowering disposable income.
These tax cuts will cause revenue to drop, and proposed infrastructure spending will increase expenses. Legislators will say this will cause a hole in the deficit initially, but growth will lead to the tax cuts paying for themselves, Bryson said.
“I’ve got news for them,” he said. “No. That’s not going to happen. Why not? Just look at history.”
While there’s still a lot of uncertainty, Bryson advised planning for 2017 by looking at the past few years as a baseline.
The event was sponsored by Wells Fargo.
Before Bryson was introduced, Bob Firely, partner at Herbein Co. in Wyomissing and chairman of the chamber’s board, said a CEO for the new Greater Reading Chamber and Economic Development Corp. should be in place by February after a national search. The corporation will combine the chamber, Greater Berks Development Fund and Greater Reading Economic Partnership.
“We will have a single voice dedicated to building our economy,” Firely said.