LOS ANGELES—There is a lot of speculation about how the Trump administration will affect the economy, and more specifically the real estate market, this year. Beacon Economics, however, isn't playing any guessing games. Robert Kleinhenz, economist and executive director of research at Beacon Economics, says that there is a lack of clarity, and the firm isn't altering it's 2017 predictions—which for Los Angeles were very positive—based on speculated policy changes.

“There are a lot of analysts and forecasters that are taking the Trump victory that are saying, with an increase spending on infrastructure and tax cuts, there should be a boost to GDP. If all of that comes to pass, indeed there will be a boost to GDP,” Kleinhenz tells GlobeSt.com. “I don't think that we have enough details to connect the dots between proposed Trump policies and how they are going to affect the performance of the US economy. We are holding our cards close to the vest right now because it is not clear to us that we are going to see a spurt in 2017. There is a big question mark and a lot of uncertainty around how we see the Trump administration and its economic policies rolling out.”

It isn't merely a lack of clarity from the incoming administration, although it has been hard for economists to get a clear grasp of his specific economic plans, but also a lack of clarity on support from the Republican Party. “The Trump administration has to get these policies through,” explains Kleinhenz. “Although there is republican dominance in the house and the senate, there is the Tea Party faction and other parts of the Republican Party that might be somewhat disruptive when the Trump administration submits its plans.”

The economy can always go in an inconvenient and unexpected direction, but Kleinhenz actually believes that it will be business as usual in 2017. “There is a possibility that we could do worse in 2017 than we did in 2016,” he says. “The easiest statement to make is that we are going to stay on track with the recent performance with GDP, which is a low to mid 2% range for GDP growth in 2017. The unemployment rate is going to be right around the full employment rate, like it has been. So many of these observations about the economy are going to happen regardless of Trump's economic plan.”

Although Trump has yet to be sworn into office or effectuate any economic change, the change in sentiment is already affecting some investors. “Not knowing the specifics has increased the uncertainty, and it could mean people sitting on their hands for a while,” says Kleinhenz. “Investors seem to be banking on faster growth in the economy. Whether or not that is driven by economic plans and their implementation on the part of the Trump administration or some expectation that we will see higher inflation and a better performance of the global economy.”

Instant Insights /

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