How the president-elect will 'Trump-start' the economy
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As it became increasingly clear on the night of Nov. 8 that Donald TrumpDonald John TrumpHouse Republicans move to block Yemen war-powers votes for rest of Congress Trump says he's considering 10 to 12 contenders for chief of staff Michael Flynn asks judge to spare him from jail time MORE would be elected as the 45th president of the United States, global financial markets initially reacted in what was a massive selloff in stocks.

Commentators on the major news networks fanned the flames of the meltdown by making sure their audiences were braced for what some promised were chaotic times ahead.


Fast-forward a week, and the Dow Industrials reached their all-time peaks and the U.S. currency strengthened to new yearly highs.

Clearly, a President-elect Trump was not the nightmare scenario that these pundits claimed would materialize, according to global markets.

So, what happened? And why did acclaimed economists like Simon Johnson at the Massachusetts Institute of Technology predict a crisis if Trump were elected, the opposite of what markets are currently pricing in?

While it might be tempting to point at some illuminating data set or behavioral psychology to explain financial markets' exuberance following Trump’s win, a simpler theory may apply.

That is, when Trump provided his inspiring, yet sober, acceptance speech in New York last month, the markets and the world saw a pragmatic man on stage. For as controversial his remarks were during the campaign — on issues such as immigration on trade — Trump presented a presidential figure when his victory was complete.

After the speech, the stock market climbed from the depths of calamity and a sense of optimism sprang from investors and trading desks around the world. In what has been named the "Trump trade," stocks have risen, bonds have sold off, and the U.S. currency is strong.

Of course, markets fluctuate, and there is bound to be a correction at some point. Nevertheless, a narrative is taking shape that envisions Trump enacting policies that are fundamentally good for growth.

And Trump might just be essential jolt that the global economy is in dire need of right now.

For much of this year, forecasts from such institutions as the International Monetary Fund (IMF) have consistently revised growth expectations downward for most of the developed world. As a symptom of this malaise, interest rates on 10-year government bonds from countries like Japan and Germany have dipped below zero, reflecting policymakers' lack of concern about future inflation.

However, the risk of deflation has caused worries amongst economists, including liberal Paul Krugman, who has argued vehemently time and again for a boost in fiscal stimulus in the form of infrastructure spending. Although Krugman cringes at the idea of a Republican-controlled government, his wishes might come to pass when Trump takes office in January and Speaker Paul RyanPaul Davis RyanHouse Republicans move to block Yemen war-powers votes for rest of Congress Stefanik: GOP leaders need to step up their female recruitment efforts McConnell agrees to vote on Trump-backed criminal justice bill MORE's (R-Wis.) Congress faces a mandate from the people to fix America's crumbling roads, bridges and airports.

A Trump-led infrastructure boom has the potential to spur economic growth, as private sector participants may take advantage of tax credits that underlie the new administration's plans.

With the U.S. economy humming along at around a 2 percent growth in gross domestic product (GDP) and with productivity virtually flatlining over the past eight years, a Trump reflation could reinvigorate the broader global economy, which still catches a cold when America sneezes. Foreign investment could flood into the country, as the promise of higher returns from ambitious projects would make America a better bet than emerging markets, which have faced significant headwinds over the past two years largely stemming from a slowdown in China.

Combined with campaign promises to reduce government interference in the economy by removing burdensome regulations, businesses should be confident that developments will reach completion.

These are good things, indeed.

Rest assured, a lot will happen between now and January. A Cabinet is being formed that includes positions vital to the economy.

Self-made billionaire Wilbur Ross, the choice for the Department of Commerce, is an excellent appointment. He has turned around debt-ridden companies within stagnant industries like coal and steel. This is precisely the mindset our country needs right now, one that can find opportunity where others see failure.

Similarly, the nomination of Steven Mnuchin to head the Department of the Treasury is remarkably clear-sighted. During his years as an investment banker and as an entrepreneur in the film industry, he has cultivated the acumen needed to finance ambitious projects. As secretary of the Treasury, Mnuchin can use his diverse experience in the private sector to help guide the world's largest economy. Critically, he can create structures that enable the financing of the Trump infrastructure plan, incentivizing businesses and luring foreign direct investment.

The infrastructure plan laid out by Trump's team paves the way for significant progress on getting the country back on track.

However, there are some Republican leaders who remain hesitant in putting forth a truly stimulative spending plan that includes provisions such as rebuilding our highway system. For instance, Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellOval Office clash ups chances of shutdown On The Money: Trump, Dems battle over border wall before cameras | Clash ups odds of shutdown | Senators stunned by Trump's shutdown threat | Pelosi calls wall 'a manhood thing' for Trump Mellman: Enemies of democracy MORE (R-Ky.), after the election, suggested that infrastructure is not one of his top priorities.

After Trump's inauguration, I sincerely hope this changes, and our elected leadership listens to the millions of voters from both parties that have asked politicians to fix our crumbling roads, highways and bridges.

Doing so will bring jobs and investment, giving our economy the "Trump-start" it badly needs.

David Karg is managing partner of Checkmate IQ, a strategic advisory and communications firm.

The views expressed by contributors are their own and not the views of The Hill.