Electing Donald Trump president would be terrible for the economy, according to a new report from Moody’s Analytics.
The super rich would get richer and everyone else would be worse off, Moody’s concludes.
Just how bad would it get? The downturn under a President Trump would last longer than the Great Recession. About 3.5 million Americans would lose their jobs, unemployment would jump back to 7%, home prices would fall, and the stock market would plummet, Moody’s predicts.
“The economy will be significantly weaker if Mr. Trump’s economic proposals are adopted,” writes Moody’s. “It will be a difficult four years for the typical American family.”
While Moody’s Analytics is an independent research group, the chief economist and lead author of the report on Trump is Mark Zandi, who donated $2,700 to Hillary Clinton’s campaign last year, according to OpenSecrets.org. In the past, Zandi was an economic advisor to John McCain, but he then came out strongly in favor of President Obama’s stimulus package to boost the economy.
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Trump’s problematic policies
Trump has three really bad economic policies, according to Moody’s:
1. Trade: Trump’s idea to put big taxes on imports from China and Mexico would hurt growth, Moody’s finds. Americans would face higher prices at the store on many goods, inflation would rise overall, and the U.S. would get less foreign investment.
2. Immigration: The plan to limit immigration and deport up to 11 million illegal immigrants would be costly — for the government and businesses.
3. Taxes: Trump proposes large tax cuts for individuals and businesses. At the same time, Trump wouldn’t touch the big drivers of government spending – Social Security and Medicare. As a result, the tax cuts are costly. The Tax Policy Center estimates Trump’s plan would add nearly $10 trillion to the debt over the next decade.
Related: Top 1% see incomes soar 188%. Everyone else … not so much
Another result of these policies would be an increase in inequality.
“More than one-third of the proposed tax cuts on personal income will go to the top 1% of income earners, with the average taxpayer in this group receiving a reduction in their tax bill of $275,000. Taxpayers in the bottom 99% of income earners will receive a tax cut of less than $2,500,” Moody’s writes.
That’s problematic for the economy for a number of reasons, but Moody’s points out that middle and working class families are the ones that typically go out and spend money at stores, restaurants and Disney World when they get extra dollars. It would be better for the economy to give the 99% more of the tax break, according to Moody’s.
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Trump’s plans are still thin
Economic forecasting is always tricky, but it’s especially hard to do with Trump since he doesn’t give a lot of specifics about his plans. Trump is fond of saying that everything is negotiable.
“Quantifying Mr. Trump’s economic policies is complicated by their lack of specificity,” the report says.
Moody’s is the latest in a growing list of prominent researchers and business people to warn that Trump’s proposals would likely cause a recession.
The team at Moody’s also ran the numbers on what would happen if Trump could only get some of his policies through Congress — a “Trump lite” agenda. That would still lead to a recession. A third scenario, where Congress blocks or heavily edits most of Trump’s plans on trade and taxes, was also analyzed. Under that scenario, the U.S. would still slow to a standstill, but it probably wouldn’t be an official recession.
Moody’s plans to do a similar analysis of what would happen to jobs, the economy and the stock market if Hillary Clinton is elected and enacts her policies. Since 1980, Moody’s has correctly predicted the winner of each presidential election. It currently predicts that Clinton will win the White House in November.
CNNMoney (New York) First published June 21, 2016: 12:01 PM ET