NEW YORK (Reuters) - President Donald Trump's promised U.S. infrastructure spending package will likely never become law, shouldered aside by lawmakers in Congress focused on cutting corporate taxes and reducing regulations, a Wall Street economist said on Tuesday.
Stifel chief economist Lindsey Piegza told the Reuters Global Markets Forum that widely expected spending of as much is $1 trillion on bridges and airports - seen just months ago as low-hanging fruit for Trump - had less than a 50 percent chance of passage by Congress.
Here are excerpts from the conversation:
Question: Just months ago, odds on a big spending program for America's chronically short-changed infrastructure were bright. Passage by Congress seemed a slam-dunk and a concrete argument for bidding up stocks. Where are we now?
Answer: That is not one I am willing to bet on. $1 trillion has already been reduced to $550 billion. Rapidly ageing population, Medicare/Social Security set to be exhausted by 2029; Dems will be more focused on funneling dollars into entitlements than the much needed infrastructure.
There could be aspects of increased infrastructure spending tied into a larger package of other spending items but a focused and large spending package on infrastructure alone is unlikely in my mind. Yes, under 50 percent (chance of passage by Congress).
Q: Is Trump, so far, a net plus for the economy?
A: Businesses are very optimistic the Trump administration will usher in policies of lower taxes and reduced regulation, but until we see that policy come to fruition it remains political rhetoric. Confidence will only go so far. Certainly Trump has the potential to be a net positive but we need to see more action.
Q: Markets are up a lot since Nov. 8, mostly on hopes of economic reforms. Which major proposals must he deliver to avoid a reversal of those gains?
A: Tax reform I believe is at the top of the list, then comes health-care reform, and certainly regulatory reform in the top three. It's a big list. Trump has made many promises but it will be difficult to push this agenda through.
The equity market appears to be ahead of itself. ... So either Trump policies need to catch up to the market or the market needs to simmer down back to the modest reality.
(This interview occurred in the Reuters Global Markets Forum, a chatroom on the Eikon platform. For details, or to join the conversation, follow: https:forms.thomsonreuters.com/communities)
Reporting by Michael Connor in New York; Editing by Leslie Adler