Moody’s: Trump Business Practices Would Ruin the US Economy

© REUTERS / Jim Urquhart/File PhotoRepublican U.S. presidential candidate Donald Trump speaks at a campaign rally in Eugene, Oregon, U.S. on May 6, 2016
Republican U.S. presidential candidate Donald Trump speaks at a campaign rally in Eugene, Oregon, U.S. on May 6, 2016 - Sputnik International
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Moody's analysts have predicted that if presumptive Republican nominee Donald Trump becomes president this year, economic growth in the US will be significantly undermined.

In a recent report, the international ratings agency predicted that Trump's tax proposals, spending programs, immigration policies and trade practices, if realized, would push the US economy into a long-lasting recession.

"The economy will be significantly weaker if Mr. Trump's economic proposals are adopted," analysts wrote.

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Moody's warned that if Trump becomes the next US president, by 2020, at the end of his four-year term, the US would see a reduction of 3.5 million jobs, and a jump in unemployment levels, from the current 5 percent, to 7 percent.

Among the many major negative economic factors of a Trump presidency, according to Moody's, would be declines in international trade, immigration and direct foreign investment, due, in part, to isolationism. Such an approach would reduce tax revenues, increase the fiscal deficit and prompt the growth of the national debt.

"Requiring millions of undocumented immigrants to leave the country reduces the size of the labor force, and the higher tariffs on imports from two of our largest trading partners [China, Mexico] increases the price of imported goods. The result is a smaller economy and higher inflation, something akin to stagflation," the report reads.

"As the immigrants leave, the already tight labor market will get tighter, pushing up labor costs as employers struggle to fill the open job positions. Many of these positions will go unfilled… Mr. Trump's immigration policies will thus result in fewer jobs, potentially severe labor shortages, and higher labor costs."

The report emphasizes that the tax remissions suggested by Trump will be beneficial primarily to the highest-earning Americans, while the middle class will lose jobs and suffer from increased inflation. Savings will shrink, influenced, partially, by declining stock prices and real estate value.

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The analysts admit that their forecast is based on talking points laid out in Trump's speeches and interviews, and point out that politicians are notorious for making promises during an election race that are, at best, forgotten after the votes are counted.

But even if the US Congress can reel in a Trump agenda, "the upshot of Mr. Trump's economic policy positions under almost any scenario is that the US economy will be more isolated and diminished."

Moody's will release an analysis of how Hillary Clinton's pre-election proposals would influence the US economy in the near future.

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