The macro and market consequences of a second Trump administration

Donald Trump’s second presidency is likely to result in lower US GDP growth, faster US inflation and a slightly higher path for the fed funds rate. The implications for the rest of the world are highly uncertain, not least because it is unclear how many of the pledges he made on the campaign trail will translate into a programme for government. In general, however, we think the immediate effects will be smaller than many seem to fear. This is not to say that Trump’s re-election doesn’t matter – just that the consequences are unlikely to be found in changes to global GDP growth over the next year.