Stocks in The United States made huge gains last night, indicating a positive response from markets to Donald Trump’s speech to congress. Shares in banking also spiked, triggered by expectations that the Federal Reserve may raise interest rates soon following the Commerce Department’s report that January saw the highest growth in inflation over four years.

The possibility of major economic stimulus in The United States had a flow-on effect upon the European markets, which also made notable gains following Trump’s speech.

Trump commits to strengthening U.S. economy

President Donald Trump pledged that he would provide massive tax relief to companies and the American middle class, and promised to make a $US1 trillion commitment to infrastructure.

"Right now American companies are taxed at one of the highest rates anywhere in the world," Mr. Trump said. "My economic team is developing historic tax reform that will reduce the tax rate on our companies so that they can compete and thrive anywhere and with anyone. It will be a big, big cut and at the same time, we will provide massive tax relief for the middle class… we must create a level playing field for American companies and our workers.”

How will Trump pay for the economic stimulus plan?

Trump’s policies will likely stimulate the U.S.

economy in the short term, with diminished sources of revenue likely to become a source of growing concern after approximately 18 - 24 months.

It is not clear how Trump intends to pay his massive infrastructure projects, especially as the tax base will be reduced as a consequence his proposed corporate tax cuts and tax concessions for the middle class.

The absence of where the necessary revenue to fund Trump’s ambitious plan is quickly becoming a growing source of pressure upon the administration, with a recent study by the Washington Post estimating that infamous ‘wall’ will cost approximately $24bn - over double the $10bn estimate that Trump had initially made.

The 650 miles of fencing already constructed has cost in excess of $7bn, suggesting that the expenses required to complete the project may go far beyond current expectation.

Follow the page Donald Trump
Follow
Don't miss our page on Facebook!