The economy of the United States may be recovering but it is a flawed recovery, reports the Financial Times. It is apparently ripe with dangerous levels of inequality and poor productivity growth.
The Financial Times reports the GDP growth for Q3 of 2016 to be 3.5%, higher than what was expected. Trump claims credit for it, while Obama's supporters argue otherwise.
Sam Fleming wrote in an article, however, that although the economy is recovering, it is a flawed one. He cites as evidence the income inequality that pervades the US population.
The top 1 percent of the population enjoy a larger share of income compared to other G7 countries, wrote Fleming. Moreover, the tax cuts of Donald Trump will not do anything to lessen the prevalent inequality seeing at it is mostly the rich who will benefit from them.
Poor productivity was also cited and this will affect income growth. According to the Economic Policy Insititute, the bottom 95 percent of households in 2015 had incomes that were lower than in 2007 despite the jump in real income growth.
On the one hand, Trump has claimed that he is responsible for stronger and rising consumer confidence while Obama's supporters, on the other hand, state that it was the result of the policies made by the outgoing president.
For instance, the chairman of Obama's Council of Economic Advisers said that the economy was on the brink of another Great Depression when Obama stepped in. Its recovery would understandably be slow and gradual in the making.
Furthermore, there were the financial rescue attempts made by Bush and continued by Obama as well as the fiscal stimulus provided by the Recovery and Reinvestment Act of 2009. All of these contributed to the budding economic recovery.
Many have written about what the economy with Trump at the helm will look like. Some firms have already taken to announcing their hiring plans to create job growth while there are also some who write that there may be a rise in mergers and thus a fall in innovation and competition in the Trump Administration.
Sam Fleming points out that Trump needs to tread carefully regarding the present state of the economy. He wrote that analysts fear that the President Elect's protectionism could lead to a trade war that will weaken consumer confidence in the near future.
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