US President Donald Trump is creating an environment that’s conducive to strong consumer spending, says economist Robert Shiller. It’s a major force that should hold off a recession, he adds.
“Consumers are hanging in there. You might wonder why that would be at this time so late into the cycle. This is the longest expansion ever. Now, you can say the expansion was partly [President Barack] Obama,” Shiller said in an interview with CNBC. “But lingering on this long needs an explanation.”
The explanation, according to the Yale University professor, is US President Donald Trump.
“I think that [strong spending] has to do with the inspiration for many people provided by our motivational speaker president who models luxurious living,” he said.
According to Shiller, there’s still uncertainty and risk surrounding Wall Street. He says the biggest threat to his optimistic forecast is Trump’s impeachment inquiry.
“If he survives that, he might contribute for some time in boosting the market,” Shiller said. “We’re maybe in the Trump era, and I think that Donald Trump by inspiration had an effect on the market, not just tax cutting.”
The economy and markets should have a lot of runway left for gains if Trump remains in office due to his pro-spending, pro-business narrative, the economist said.
The next recession may not hit for another three years, and it could be mild, he added.
“Let’s not make the mistake of assuming it’s right around the corner,” Shiller said. “If the economy is strong, which is what he built his case on, ‘make America great again,’ he has a good chance of getting re-elected.”