Trump Unveils Budget, Infrastructure Plan as Inflation Expectations Fall
February 12, 2018
President Trump unveils $1.5 trillion infrastructure plan; Trump FY 2019 budget calls for 2% reduction in discretionary spending after 2019.
- President Trump unveils $1.5tn infrastructure plan. The President unveiled an infrastructure spending plan with a 1.5 trillion-dollar price tag financed mostly by state and local government, as well as private dollars. The federal contribution would be roughly 200 billion dollars, which the President has conceded is not a large amount, with funding coming from specific cuts elsewhere in the budget. The plan offers funding for rural communities and encourages apprenticeships and workforce training components. Critics say the plan is insufficient, and a drop in the bucket compared to the American Society of Civil Engineers’ stated backlog of $4.59 trillion in investment. [Politico]
- Trump FY 2019 budget calls for 2% reduction in discretionary spending after 2019. President Trump’s fiscal year 2019 budget calls for cutting entitlement programs by $1.7 trillion, and seeks funding for veteran’s health care, combating opioid abuse, and a border wall. The budget document also calls for annual 2% cuts to non-defense domestic spending, and aims to cut the federal deficit by $3 trillion over ten years, without specifics as to which spending would be cut. The plan also includes heavy emphasis on immigration enforcement, including almost $3 billion dollars to detain undocumented immigrants, and $18 billion for the border wall. The budget assumes 3% economic growth over the next decade. [Bloomberg]
Economic Indicators & News
- Inflation expectations fall in January. According to a New York Fed survey released Monday, consumers’ expectations of inflation declined in the month of January, in contrast to expectations of experts and the markets, whose inflation expectations rose. Median inflation expectations fell 0.1% to 2.7% on a one year time frame, and the three-year horizon also fell to 2.8%. The Federal Reserve has attempted to maintain inflation around 2%, but has missed the mark six years in a row. Finally, inflation expectations are beginning to accelerate. Consumers were also optimistic about earnings growth. [Market Watch]