Report: State, U.S. economic growth clouded by ‘turmoil’ in Trump administration

The future of the steadily growing economies in California and nationwide is clouded by “ongoing turmoil” in the administration of President Donald Trump, according to a new economic forecast from Beacon Economics.

The Los Angeles-based research and consulting firm says “two oddly opposing themes … form the backdrop of the economic outlook”: modest economic expansion and “no clear public policy agenda from the new administration as it struggles with a variety of political crises largely of its own making.”

“The year is likely to start on a slower note, a very typical pattern we’ve seen in the economic expansion,” said Christopher Thornberg, Beacon’s founding partner and a co-author of the report. “But economic fundamentals continue to strengthen and will make the rest of the year stronger – implying that 2017 should be a better year overall than 2016.”

Beacon predicted that a strengthening global economy, a rebound in mining activity and tightening labor markets will create economic growth of about 2.5 percent nationwide in 2017. But Thornberg warned that continued turmoil in Washington, D.C., could affect growth.

“The policy uncertainties that Donald Trump’s election created have only become worse as his administration moves into its third month,” Thornberg said. “That is unfortunate given that he inherited the strongest economy of the past decade, and this kind of unnecessary disruption could harm those positive trends.”

Robert Kleinhenz, Beacon’s executive director of research who focused on California’s future in the report, said the Golden State should experience continued growth in economic activity and jobs throughout 2017, with job gains likely in the health care, leisure/hospitality and professional services sectors.

However, Kleinhenz warned that housing affordability, water issues and delayed financing of infrastructure improvements could put the brakes on growth, along with the ongoing political battles pitting California’s needs against the policies of the Trump administration.

“California has good reason to be concerned about the disruptive political environment that has characterized President Trump’s early months in office,” Kleinhenz said. “This state’s economy is hardwired to the rest of the world, and his proposals related to immigration and trade could have fairly severe consequences depending on how far changes to current law go.”

In his report on California, Kleinhenz noted that “state leaders have their work cut out for them as they try to ensure decisions from Washington neither trip up the California economy, nor work against its businesses and residents.”

This story was originally published March 29, 2017 at 10:20 AM with the headline "Report: State, U.S. economic growth clouded by ‘turmoil’ in Trump administration."